Planning for your child’s education is one of the most thoughtful financial steps you can take as a parent. In Canada, a Registered Education Savings Plan (RESP) is a powerful investment tool that helps parents save for post-secondary education while benefiting from government grants and tax-deferred growth. However, many parents unknowingly make critical mistakes that can reduce their savings potential or limit their child’s funding opportunities.
At Punjab Insurance Inc., a trusted name in financial planning in Canada, including Calgary, we’ve helped thousands of families make smarter financial choices. In this blog, we’ll uncover the top RESP mistakes parents make and how to avoid them—so your child gets the education they deserve, and you maximize every dollar you save.
1. Delaying RESP Contributions
The Mistake: Many parents delay opening or contributing to an RESP, thinking they have ample time before their child reaches college or university. But the sooner you start, the better.
Why It Matters: Delaying means missing out on potential growth through compounding interest and losing valuable Canada Education Savings Grant (CESG) opportunities. The government matches 20% of your annual contribution up to $500 per year (on a maximum of $2,500), with a lifetime cap of $7,200 per child. If you don’t contribute in time, you could miss out on this free money.
How to Avoid It: Start early—even with small amounts. Even $25 or $50 per month can add up over time. Speak to an RESP expert at Punjab Insurance Inc. to set up automated contributions that fit your budget.
2. Not Applying for the CESG or Additional Grants
The Mistake: Assuming your RESP will automatically receive government grants.
Why It Matters: While opening an RESP is the first step, you must apply for the CESG and other programs like the Canada Learning Bond (CLB). Missing this step can cost your child thousands of dollars in government support.
How to Avoid It: Work with a financial advisor who understands RESP regulations. At Punjab Insurance, we ensure all eligible grants are applied for when you open your RESP, so you don’t leave money on the table.
3. Choosing the Wrong Type of RESP Plan
The Mistake: Opting for an individual or group RESP without understanding the pros and cons.
Why It Matters: Group RESPs often come with high fees, less flexibility, and penalties if your child doesn’t follow a traditional education path. On the other hand, individual and family RESPs offer more control and adaptability.
How to Avoid It: Understand the differences before choosing. At Punjab Insurance Calgary, our experts will guide you through the best RESP options tailored to your family’s unique goals and financial situation.
4. Not Naming the Right Beneficiaries
The Mistake: Failing to properly name or update the RESP beneficiary, especially in family plans or blended families.
Why It Matters: This can lead to unnecessary taxation or loss of government grants. Also, if the beneficiary doesn’t attend post-secondary education, you may face penalties when withdrawing funds.
How to Avoid It: Keep your RESP details up to date and review them regularly—especially after major events like a birth, divorce, or remarriage. Our team can help you structure your RESP to accommodate future changes.
5. Withdrawing Funds Incorrectly
The Mistake: Parents often withdraw funds from the RESP in the wrong order or at the wrong time, which could trigger taxes or the loss of grant money.
Why It Matters: Educational Assistance Payments (EAPs) are taxable in the student’s hands, who usually has little to no income. But if you withdraw contributions instead of EAPs first, you could miss out on tax savings or grant benefits.
How to Avoid It: Plan RESP withdrawals strategically. Punjab Insurance advisors can help you time withdrawals to minimize taxes and maximize benefits during your child’s post-secondary education years.
6. Ignoring RESP Investment Strategy
The Mistake: Parents often treat the RESP like a savings account—low risk, low return. Others invest too aggressively without considering the time horizon.
Why It Matters: The RESP should be invested based on your child’s age and risk tolerance. Poor investment choices can lead to losses or missed growth opportunities.
How to Avoid It: Revisit your investment strategy every few years. At Punjab Insurance Inc., we help parents design a risk-adjusted RESP portfolio—more growth-focused when your child is young and more conservative as they near college.
7. Not Coordinating RESP with Other Financial Goals
The Mistake: Overcommitting to education savings without considering protection for your family’s overall financial future.
Why It Matters: If a parent passes away unexpectedly, RESP contributions may stop, potentially putting your child’s education in jeopardy. That’s where RESP insurance in Canada comes in—it’s a safety net.
How to Avoid It: Pair your RESP with a smart insurance plan. At Punjab Insurance Calgary, we help parents balance RESP insurance to ensure your child’s future is protected, no matter what.
Why Choose Punjab Insurance Inc. for RESP Insurance Planning?
Whether you’re in Calgary or anywhere in Canada, Punjab Insurance Inc. is committed to helping families like yours make informed, confident financial decisions. With decades of experience in RESP, and financial planning, we are your one-stop solution for building a secure and successful future for your child.
Our RESP services come with:
- Expert grant and bond application assistance
- Flexible contribution plans
- Investment guidance
- Withdrawal planning strategies
- RESP Insurance combo planning for full protection
Final Thoughts
RESPs are a brilliant tool—but only if used wisely. Avoiding these common mistakes can make a massive difference in your child’s educational journey and your financial peace of mind. Start planning today with the guidance of experts who care.
Contact Punjab Insurance Inc. in Calgary or anywhere across Canada for RESP insurance solutions designed with your family’s future in mind.
📞 Call us today to schedule your free consultation and make every dollar count for your child’s future.
