Nonregistered savings
Despite the growing popularity of RESPs, there are sometimes good reasons to consider nonregistered savings options. The choices are nearly limitless and include savings accounts, GICs, bonds, equities and more. For the reasons listed below, the most popular is an "informal" or "in trust" account.
• The sky's the limit. Unlike RESPs, there is no restriction on the contributions you can make to an in-trust account. Extended family and friends can pitch in, contributing as much as they like, and you'll never run out of space.
• Restriction-free. Just because the funds were originally intended for post-secondary education, there's nothing stopping your child from using them for another purpose such as starting a business or buying a home.
• Tax benefits. While contributions don't grow tax-free, in-trust accounts do provide some tax relief through income-splitting with the beneficiary -- your child. You'll have to pay some tax, but not as much as with a regular investment account.
For tax and legal purposes it's important that an in-trust account be set up properly. Get help from your legal or financial adviser if you decide to follow this route.
The Canadian Bankers Association offers further details on post-secondary savings options.
Other ways to help
Best intentions aside, sometimes it's simply impossible to find the dollars to put aside for educational savings. That's where what Junor calls "soft support" comes in. "Parents help students when they're in school with stuff that students aren't ever expected to repay," Junor says. He lists allowing a child to live at home rent-free, paying for their groceries and letting them use the family car as contributions that can add up to thousands of dollars' worth of savings.
There's no such thing as "too little, too late"
Yes, saving early is great. And, yes, it would be great to be able to pay for your child's entire education. But even if you can't pay for everything, you can open up options for your child. "Be involved, get engaged," says Junor. "Every savings step you take makes it easier.
