Many Canadian families will find they have a bit more money in their pockets this month thanks to the increase in the Universal Child Care Benefit (UCCB).
A quick reminder on what the UCCB is. Starting in 2006 the UCCB provided Canadian families with $100 every month for every child under six years of age. Although the money was intended to support the family's child care choices, it was up to the family to decide what to do with it.
Starting this year, the government made two important changes to the program. First, the $100 per month for children under six was increased to $160 per month. Second, a new payment of $60 per month was introduced for children aged six and over up to the time they turn 18. Both of these changes took effect on January 1st of this year -- but the first payment (which includes the retroactive payments since January) will be made on July 20th. This will be a pleasant boost to many families' bottom lines!
As a dad, I get that there are a myriad of enticing ways to use that money. Top up the vacation fund? Invest in some new technology? Pay down some debt?
So here's my best advice: take that windfall and make it 20 per cent bigger while investing in your child's educational future. How? Simply by topping up your child's Registered Education Savings Plan ("RESP"). If your child doesn't have one yet -- what better time than now to get an RESP started?
Think about this: if you put that extra $60 a month into an RESP for your daughter born on or after January 1st 2015, and you do that until she turns 18, you will have saved $12,960 for her college or university education. On top of that, the Canada Education Savings Grant (a federal grant which adds 20 per cent or more to your savings), means your savings will reach over $15,500. And that's before you generate any investment returns in your savings plan! You can learn more about the CESG and other education savings grants here.
Let's face it. Tuition costs are rising every year. We don't know what it will cost for university or college in 18 years -- but we know it will not be cheap! When you start saving early, it helps prevent the stress of trying to find tens of thousands of dollars when your child is ready to chase their post secondary school dreams.
So resist the temptation, get a 20 per cent boost on your UCCB money and help set your child up for long term success. In my books, there's no better way to care for your child than that.
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