Saving for your child’s future is an important part of being a parent. While all parents want to invest in their child’s future, the choices Canadian parents have are minimal. Ensuring your child is prepared for whatever paths in life they wish to follow are vital. Over the past 25 years, most parents have chosen an RESP (Registered Education Savings Plan) but are now asking the all-important question: what about all the other important milestones in their life? While the RESP is designated exclusively for educational purposes, there are other milestones in their life, like buying a home when they have a family. Here’s how to start saving for your child’s first home and why it’s important.
The Top Reason For Starting To Save Now For Your Child’s First Home
According to the ¹CIBC 2020 report by Chief Economist Benjamin Tal, Canadian parents gave their kids just more than $10-billion in 2020 to help them make the down payment on their first home. While, on average, Torontonian parents gave their kids about $130,000 toward their first home, however, this isn’t always a financial option for many families.
What happens if you can’t afford to give your child a substantial amount of money for their first home? Or, what if you have more than one child? Fortunately, you can save down payments for future homes throughout your child’s life instead of being taken directly from your retirement savings.
If you’re looking for ways to save for your child’s first home or another life event that isn’t post-secondary school like starting a business, an RESP won’t be sufficient. Some families decide to save money for their children by using a TFSA (tax-free savings account). While it’s true that a TFSA is a great option for tax-free savings, the contribution room does not begin to accumulate until the year your child turns 18, when a full year of TFSA room is available.
If you are interested in establishing a unique plan to create your child’s own tax-free savings account for their future, in which you can begin saving just weeks after your child’s birth as opposed to when they’re already an adult. In that case, you may want to consider working with Child Plan, the only tax-free savings plan available to parents and grandparents in Canada.
Child Plan is a participating Whole Life Plan, and the only tax-free investment parents and grandparents can set up for their children and grandchildren as early as fourteen days after they’re born. From the day you open the plan, your child will get a tax free annual dividend for life, and by year 20, their Child Plan is completely paid for with no further deposits ever required again, and with their Child Plan, your child has the cash value to use towards their first home and even their education if they wish.
Are you looking to save money tax-free for buying your child’s first home? What would a plan look like for your Child?
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As Canada’s leader in financial planning for children, Child Plan™ is committed to helping parents and grandparents plan for their children’s futures. Children are the future, build a future for them you can be proud of.