Category: Parenting

How do RESPs work?

Daryl Frewing in Surrey B.C. asks: How do RESPs work? The Globe’s personal finance digital editor Roma Luciw explains the basics:

Many Canadian parents understand that saving for their child’s post-secondary schooling through a Registered Educational Savings Plan is a good idea. What many Canadian parents don’t understand are the nuts and bolts of how an RESP works. And given the confusing array of regulations, options and limits that surround RESPs, that’s not surprising.

Here, in a nutshell, is what you need to know: In order to open an RESP, the beneficiary of the account must be a Canadian citizen and have a social insurance number. (Note to new parents, get your child a SIN as soon as they are born.)

You – or any family member, friend or loved one – can contribute as much as $2,500 a year per child in an RESP and receive a matching 20-per-cent grant from the federal government.

Yes, you read that right. Through something called the Canada Education Savings Grant, the government is going to give you 20 cents in free money for every dollar you put into an RESP – to a maximum of $500 each year.

Doesn’t sound like much? Well, between when a child is born and turns 17, they can receive a lifetime maximum of $7,200 in government funds, providing their RESP account has been topped up annually. (Some children from lower-income families might also be eligible for additional grants.) At a time when college and university costs are higher than ever, that kind of money is nothing to scoff at.

The other important thing to know is that an RESP is not an investment but rather an investment account. That means that you can put anything from guaranteed investment certificates (GICs), stocks, exchange-traded funds (ETFs), mutual funds to bonds into an RESP. When your child is young, you can likely afford to invest more aggressively in your RESP, then as your child ages slowly reduce the risk level, eliminating it by the time they are done high school.

The investments within an RESP will grow tax-free, which means that if you start the account when they are young, there will eventually be more money in your child’s educational nest egg. If you wait until your child is older to start the account, there will be less time to make annual contributions and less time for your investments to grow within the RESP.

If you fall behind, one year of missed contribution room can be used each year, in addition to the current year’s maximum contribution room. The moral? Don’t wait until your child is a teenager to open an RESP.

And with the holidays looming, now might be a good time to ask grandma and grandpa to skip the dollhouse or train set and invest in your child’s future education instead.

Follow Roma Luciw on Twitter, and read more from The Globe’s Personal Finance section.

Many kids’ sports leagues are taking winning and losing out of the game. Isn’t competition part of sports?

“Many kids sports leagues and associations (e.g. soccer) no longer keep score at games, track standings or have playoffs/tournaments where a winning team is declared,” writes Josh Cobden in Toronto. “Isn’t competition part of sports?” Globe Life & Arts reporter and father of two, Dave McGinn weighs in:

Two summers ago, I went to watch my niece play soccer. My daughter was excited to see her cousin in an actual game—look at that jersey, she’s so grown up!—and I was excited to see my brother in his job as the coach of her team (look at that whistle, he’s so grown up!)

They played the way all little kids play soccer: Everyone on both teams surrounded the ball and moved up and down the field as one giant mass. Every now and then, a kid would get the ball and break away from the pack, often in the wrong direction. My brother would windmill his arms to get the kid’s attention, and smiling parents would yell, “The other way! Go the other way!”

Afterwards, we went to get ice cream. Would any of the kids be happier if they were told they won the game? I seriously doubt it. Thankfully, I didn’t have to worry about it because no one was keeping score.

Personally, I want my kids to love sports because sports are awesome. I want them to build self-confidence and self-esteem. Considering the rates of obesity in this country, I want my kids to develop a lifelong love of physical activity through sports. I want them to learn dedication and good sportsmanship.

Along the way, I want them to learn responsibility, whether it’s by oiling their baseball gloves or making sure their cleats and shin pads are packed in the car as we head to practice. That, too, is one of the important things sports can teach kids.

Some researchers say there shouldn’t be competition in kids’ sports at any age. “The less competition that’s present in kids’ play, the healthier and more productive it is for them,” says Alfie Kohn, author of No Contest: The Case Against Competition. “Overwhelming research indicates that competition undermines psychological health, strains relationships and reduces achievement.”

So let’s take the question ‘isn’t competition part of sports?’ and instead ask ‘what kind of competition? How much? And when?’

“One of the problems we have is people either have full-fledged competition, like the Super Bowl for babies, or nothing. It’s much better to think of a developmental progression,” says Daniel Gould, director of the Institute for the Study of Youth Sports at Michigan State University.

The big concern that underlies eliminating competition from sports is that by giving trophies to everyone regardless of effort or outcome, we’re raising kids who will expect to be handed trophies their entire lives in one form or another without working for them. It’s a legitimate worry.

The Canadian Long-term athlete development model is a very good example of how this progression should work, Gould says.

A quick summary of it goes like this: First, little kids get engaged in physical activity (Can you jump? Can you hop?) Then, around the age of six, learn fundamental movements to promote balance and agility. (Can you dribble from one end of the pitch to the other?) From there, you can introduce scoring but not place much emphasis on it; and then, finally, when kids reach their teen years, competition becomes more important, with medals and trophies and winners and losers.

“In the teenage years, kids need to learn how to win and they need to learn how to lose,” Gould says.“I think some parents forget to do that, and then they wonder why their kid’s not independent at 14,” Gould says.

When they’re old enough,  I want my kids to know how good it feels to earn victory, and how to recover from a loss that just totally sucks. So yes – competition is part of sports at a certain age,though a yes or no answer doesn’t get us anywhere close to the nuance, complexity and careful understanding the issue requires.

And one thing I’m learning as a parent—my children are five and three—is that thinking through issues with nuance, complexity and careful understanding is our job if we want to do what’s best for kids. It’s not easy or simple, and sometimes people are screaming at you, or flinging things at their sister, but you need to do it all the same.

Sport is about competition. But it’s about so much more than that, too.

By the way, my niece? She still loves soccer. I don’t even know if her league has started to keep score, but you should see her out there. She runs all over the pitch with this huge, determined grin on her face. She’s way better than she was when she started playing, and she wants to get even better. That’s a kid who’s winning.

Read more from Dave McGinn here, including essential reading In Praise of the Fun Dad