Maximizing RESP Contributions During the Holidays
The holidays are almost here. Are you excited? December is a busy month. Besides the holidays and the first day of winter, it marks the last month of the year you can contribute to your child’s RESP. You have until December 31st to maximize your child’s RESP contributions.
Why should you try to maximize your child’s RESP contributions? Besides giving your son or daughter a brighter future, the government of Canada will add an extra 20 percent on every dollar contributed to an RESP up to a maximum of $500 per child.
If you haven’t contributed $2,500 in a calendar year, you’re essentially leaving money on the table. Likewise, if you have contributed the full amount in previous years, you can play catch up and contribute up to $5,000 in a single year to receive a $1,000 grant.
If you haven’t contributed the full amount this year, don’t panic. There’s still time to contribute before the clock strikes midnight on New Year’s. Here are three frugal spending ideas to come up with some extra money to top-up your child’s RESP before year end.
- Hold a Secret Santa Gift Exchange
Do you have a lot of family members to buy gifts for? Instead of buying gifts for every single one and starting the new year in debt, why not host a Secret Santa gift exchange? In case you’re unfamiliar, a Secret Santa is when you write all the participants’ names on pieces of paper and put them in a hat (or Santa’s hat, if you want to even more festive). Next, everyone draws a name out of a hat. The person’s name that you draw, you’re supposed to buy a gift for them. (Just don’t tell them it’s from you. Otherwise, you’ll ruin the “secret” part.)
A Secret Santa gift exchange is a great way to save money. By setting a spending limit of, say, $20, depending on how many people in your family, you can easily save yourself, say, $200 – money you can put towards your child’s RESP.
- Set a Holiday Budget and Track Your Spending
Many families have a budget, but do you have a holiday budget? The holidays can be such a costly time, that it can be easy to lose track of your spending. It’s not enough for holiday spending to be a single line in your monthly budget. You need to take it a step further and plan out your holiday spending in advance with its own budget.
Start by writing down the names of everyone you’d like to buy presents for. Next, set yourself a holiday spending limit per person. Then tally up the total dollar amount and adjust as needed. With the list in hand, go shopping for each family member. (Just don’t let the list out of sight. You don’t want to accidentally overspend or buy two presents for one family member.)
By doing a better job of tracking your holiday spending and setting a spending limit, it shouldn’t be hard to come up with some extra moolah, money that you can put towards, you guessed it, an RESP.
- Don’t Go Overboard on the Deals
When it comes to deals, there is such a thing as too much of a good thing. While everyone likes a deal, that last thing you want to do is go overboard. When something is 20 percent off, it’s still 80 percent on. Taking advantage of too many deals can set you back some serious change and blow your holiday spending budget.
The best way to avoid going overboard on deals is to try to avoid the impulse to spend. Unless you’re going to buy something, stop browsing flyers in your spare time. Likewise, unsubscribe from holiday deal newsletters. By not needlessly spending this money, you can redirect the saved money to your child’s RESP and make the most of government grants before the new year.