A tax refund may sound like a bonus, but honestly, it is not. It is just the money you have overpaid toward the government which is required by the law to be returned. Most people think of it as spare money since it is not usually considered in a daily budget.
For that reason, many used it to cover their travel expenses, purchase luxurious items, or pay past due bills. If you have kids, the best option is to invest the money for future education. Quality schooling isn’t cheap, so you might want to consider a Registered Education Savings Plan, or RESP.
What Is RESP?
RESP is a tool of investment meant to help parents save money for their kid’s education all the way to secondary level. Anyone is able to open an RESP for their child.
There are 3 types of RESPs available: ‘individual’ wherein the listed beneficiary is only 1 child, ‘group’ wherein the contributions made are pooled for children of the same age as your child, and ‘family’ wherein there is more than one beneficiary.
RESPs can either require fixed monthly contributions or a flexible type of payment. Across all RESPs, a $50,000 per child limit is imposed for lifetime total contribution.
Why Is It Important to Handle Tax Refund Well?
Educational fees can increase yearly, and there is a chance that the results might be unfavorable to you. If you don’t act while you still have an opportunity, your child’s education might bear a burden later on.