RESP (Registered Education Savings Plan)

What it means

A Registered Education Savings Plan is a registered account for saving toward a child's post-secondary education. Contributions aren't tax-deductible, but growth inside the account is tax-deferred, and — its biggest advantage — the government adds grant money on top of qualifying contributions.

Why it matters

The government grant money (see CESG) is the closest thing to guaranteed free money in Canadian personal finance, which is why opening an RESP early, even with small contributions, is usually worth doing well before it feels urgent.

Common misunderstandings

• •Money in an RESP isn't lost if a child doesn't pursue post-secondary education — contributions can be withdrawn, and grant money can sometimes be transferred to a sibling's RESP or an RRSP under specific conditions.
• •An RESP can be opened by a parent, grandparent, or other family member — it doesn't have to come from a parent specifically.
• •There's no annual contribution requirement — even irregular or small contributions still attract matching grant money, up to the annual grant maximum.

Where you'll see it

In any conversation about saving for a child's future, and as a standard recommendation soon after a child is born.