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The Tortoise, the Hare, and RESPs

The race between the Tortoise and the Hare is a fable that you may have heard growing up. What you may not realize is that it teaches a valuable lesson that can be applied to budgeting and goal setting.  Here are three takeaways:

  1. Commitment pays off—the Tortoise is slower than a Hare on land but that didn’t discourage her from participating in the race.  The same can be said about money, if you earn less it means that it may take longer to reach your goals but it can still be done. Take RESPs for example, just opening one can be a good start because if you earn less money you may be eligible for FREE money from the government, such as the Canada Learning Bond (CLB) or the Alberta Centennial Educations Savings (ACES) grant. When children have a savings account in their name they are six times more likely to attend post – secondary than those without one. How’s that for generating commitment in your kids? They get to dream big and pursue their passion!
  2. Be consistent and persevere—One of the best qualities about the Tortoise is that she didn’t lose focus when she had caught up to the resting Hare but continued on ahead, taking advantage of the situation when it was presented. The Hare on the other hand, whenever she knew she was ahead of the game she would become more lax and loose the momentum that she had built up.  Being consistent and persevering is like saving a small fixed amount each month. Each time you lose momentum you require more energy and effort to build it up again, so just keep it consistent instead. Looking at the RESP, if you just make lump sum deposits from time to time you may be losing out on some government grants. Check out “RESPs are time-sensitive” by the Financial Post to learn more about why it’s better to start an RESP sooner than later. To avoid the possibility of losing out on government grants consider setting up a regular fixed deposit each month; it can be as little or as much as you want so long as you don’t exceed the $50,000 lifetime contribution amount per child/ beneficiary.
  3. Give yourself a boost—As the tortoise came closer to the finishing line all the animals in the forest cheered her on to get there faster. With RESP or any other goals that require savings you can boost up your speed to reaching those goals by selecting different types of investments that may offer a higher return, as long as you are comfortable with taking on some risk. Check out 3 Considerations before Investing Your Money to prepare yourself when you sit down with a financial advisor or banker to decide what types of investments would be suitable for your goal.

The fable of the Tortoise and the Hare serves as a good reminder for why we should be consistent in our work and goals, and never lose hope.  Good luck on your savings goals!