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Stage · Money for a new baby in Canada

Years 2+: compounding and protection

The long compound. RESP keeps growing, CCB continues, and the family's attention shifts toward education, school district, and whether to have more children. The money decisions become less frequent but bigger.

Reviewed by Ben Stevenson, Managing Editor, Canadian Money Help Updated April 21, 2026 Methodology

What to do this week

  1. Review RESP growth annually. Rebalance or adjust contribution pace based on returns and expected post-secondary costs.
  2. Keep life insurance coverage current. Review every 3-5 years or after major life events (second child, income change, home purchase).
  3. Review and update wills and beneficiaries when circumstances change: second child, marriage breakdown, relocation.
  4. If income has grown, consider RESP catch-up contributions for years you couldn't contribute the full $2,500.
  5. Start talking to children about money by age 5-6. Simple concepts around earning, saving, and waiting compound more than parents expect.

What to avoid

  • Continuing to over-fund the RESP past $50,000. The match is capped; extra contributions provide no additional growth benefit and lock up liquidity.
  • Sacrificing RRSP match or basic retirement savings to max the RESP. The child can borrow for school; you cannot borrow for retirement. RRSP match should always come first.
  • Not updating beneficiaries after life events. Beneficiary designations override your will; outdated designations cause the wrong person to receive assets.
  • Ignoring the RESP closing rules. If the child does not attend post-secondary, the growth (not the contributions) can be taxed heavily. Plan the closing or beneficiary switch well before the 36th year of the plan.

Calculators for this stage

Resp Withdrawal Strategy Family Insurance Needs Post Secondary Cost Projection

Forms to file at this stage

Provincial registered disability savings plan (if applicable)

If a child has a disability, the RDSP layers on top of the RESP. Governments match RDSP contributions generously; CDSG and CDSB combined can exceed $90,000 of match per beneficiary.

CRA: RDSP →

Frequently asked

What if my child doesn't go to post-secondary?

Options: transfer RESP growth to RRSP (if you have room and plan is 10+ years old), use the Accumulated Income Payment provision (with 20% penalty on growth plus tax at your marginal rate), or transfer to a sibling under age 21. The RESP contributions always return to you tax-free.

Should I open a TFSA for each child?

Children can't have a TFSA until age 18. Before then, an in-trust account or RESP are the standard vehicles. At 18, the child can open their own TFSA and begin their own contribution room accumulation.

How much should I have in life insurance now?

A common rule: 10x income per earning parent with dependents. Term life is cheapest: 20-year term for most Canadian parents with young children, enough to cover mortgage payoff plus income replacement until the youngest child is 22-25.

When should I stop contributing to RESP?

Stop when you hit the $50,000 lifetime contribution cap OR when the CESG lifetime match of $7,200 is reached. Contributing past either point does not add match or tax-deferred benefit; park further education savings in a TFSA instead.