Homeschooling is a popular option due to its flexibility in tailoring the curriculum to your child’s interests, needs, and learning styles. It gives families more time to spend together, while making sure children learn everything in a safer, bullying-free environment. However, the problem is that education costs are going up, making it harder for homeschooling families to deal with these unique financial challenges.
Parents find it difficult to manage the expenses of materials, curriculum, and extracurricular activities, which is why they often look for some support. One effective strategy is available in the form of a registered education savings plan (RESP). Below, we’ll explore if it is beneficial to go with this plan, and whether it can offer financial support to secure your child’s education future.
The Need to Look for Alternatives for Financial Support
If you have been looking for a way to support your child’s education, you are not alone. That’s when many turn to the Canadian Scholarship Trust (CST) for support. The foundation has helped millions of students by offering well over 267 million in support. Going with CST RESP makes a lot of sense considering the increasing cost of homeschooling.
Homeschooling costs can now go up to $2,500 per child a year, including the curriculum, school supplies, books, and extracurricular activities. Similarly, online homeschooling programs sometimes cost as much as $6,000 per child per year, depending on their age and the nature of the program. Without proper financial planning, it would become difficult for parents to manage all these expenses on their own. A CST RESP would be a great choice here.
Benefits of CST RESP for Homeschooling Families
A CST RESP is essentially a savings account created to help parents save money for their child’s education. Employment and Social Development Canada (ESDC) oversees it and transfers the money, based on your contribution, directly into the child’s account.
Irrespective of your income, the government will add 20% to your RESP contribution, with a maximum grant of $500 per child per year. There are many benefits of setting up a CST RESP. For instance:
- Long-term financial security: Homeschooling families have the option to start an RESP early to enjoy long-term financial security, as their savings grow significantly due to compound interest and government grants.
- Flexibility in usage: RESP funds can be used for a variety of education-related expenses, including transportation, textbooks, tuition fees, and even living expenses when receiving post-secondary education. These funds are especially beneficial for Homeschooling families with diverse educational plans for their children, such as international studies or vocational training.
- Tax advantages: A big reason for opening and contributing to an RESP is that the money grows tax-free. The dividends, interest, or capital gains earned within the plan are not taxed on a yearly basis, but remember that the withdrawals are taxed. However, as the funds are considered “student’s income”, your child has to pay little to no tax.
Endnote
A CST RESP serves as a practical solution for parents finding it hard to balance homeschool expenses. It is possible to secure your child’s educational future by leveraging government grants and compound interest. Tax advantages also make this option a lot more attractive. Be sure to learn more about it to see how this strategic move offers you peace of mind while protecting your child’s future.