RESP: Helping Lower Income Families

Robb Engen from over at Boomer and Echo sent me over an interesting e-mail for a new concept backed by most major banks (and credit unions) in Canada to help children of lower-income Canadians take advantage of the Canada Learning Bond (CLB)  in the Registered Education Savings Plan (RESP) .

To quote :

More than 1.4 million low-income children don’t receive the government education funding they’re eligible for because they don’t have a Registered Education Savings Plan (RESP). In fact, in Ontario, only 31% of children who qualify for the Canada Learning Bond (a contribution of up to $2,000 towards future education) – have received it. Launched today*, a new online application at is designed to help Canadians open RESPs and access the Canada Learning Bond for their children.

*- where today was January 26th, 2015

While these numbers don’t surprise me, they do worry me, because my opinion is education empowers folks, and gives them choices. The more money lower-income families can accumulate to help their kids have the chance to attend post-secondary programs, the better it is for the economy.

The official announcement from The Omega Foundation states:

In a joint initiative, BMO, Meridian, RBC Royal Bank, Scotiabank, TD and Vancity have come together to support SmartSAVER, committing to establish RESPs for lower-income families with no fees and no minimum contribution to help them access the federal government’s Canada Learning Bond. Families can apply for the Canada Learning Bond through SmartSAVER’s online application form in less than 10 minutes and choose any of the six participating credit unions and banks to establish their RESP with $0. The user-friendly application is supported in five languages (English, French, Spanish, Mandarin and Punjabi).

From what I can read the SmartSaver looks to be very helpful for lower-income families, that Banks will overlook (in terms of RESP clients):

SmartSAVER makes it easier for you to start an RESP and receive the Canada Learning Bond by only working with RESP providers who provide the most flexible kind of plan: an individual RESP that has:  No account set-up, enrolment or annual fee; and No minimum contribution requirement.

Graduates Moving

A Post-Secondary Program Gives Kids Options in Life.

So the service helps lower-income families with kids at least have access to the CLB funds available to them, without having to make any deposits, which sounds like a good idea (to me). Even if the families could spare $10 a pay to put money into this, there would be a great deal more money available, to allow their kids to have a choice to go to post-secondary schooling or not. If the family is unable to put any money into the account, they will continue to accumulate funds, from the CLB.

The program has been running as a pilot in Toronto, so this is an expansion on that initial start up project. Many interesting things were learned from that program including the fact that many bank branches and their representatives were not even aware of the CLB (I can attest to that problem, I ran into it myself at my local TD Branch).

I note there are no claims about growth and any of that, simply a statement that the program is to help folks set up RESPs to get access to the CLB (and any other funds that are available to lower-income families). My wife tried out the interface and was impressed with how it all worked as well (as I said we already have RESPs, and I don’t think this program is aimed at me).

This looks to me like a good program, that will help many more folks get the funding they need to empower their kids, and give them more options in life.

BCM Caveat: with this (and all financial programs)  it is important to read the Terms and Conditions on the web site, always make informed financial decisions.


Tax Time! TurboTax Giveaway

Yes, it’s that time of the year, where the Tax man is beefing up their Helpline, RRSP vendors are out for your last buck, and financial bloggers like me give you useful tax tips, in Canada, it is Tax Time!

This is the season when folks like Mark over at the Blunt Bean Counter earn their money, and I start getting odd e-mails about whether you can claim your dog as a dependent (the simple answer is NO! you cannot).

Tax Time

Tax Time

How better to celebrate this festive season than a Turbotax (on-line) giveaway. What is Turbotax on-line? Here is a helpful blurb about the software:

With TurboTax Online or ImpôtRapide en ligne, you prep your taxes and pay at the end, when you’re happy with the result and ready to NETFILE. 

As this is Canada, I like to stick with the concept that contest winners need to answer a skill testing question, or have to do something (I don’t give stuff away for free, just ask my kids).

This year we have a simple question that, you must answer in the comments of this article, by February  6th to be considered for this free software (I am giving 3 codes away).

Question: The stupidest thing I ever left off my tax return was _____________
(fill in the blank)

The winner will be chosen (at random) from the entries that qualify (i.e. you can’t just put in, “GIVE ME THE  SOFTWARE” and be considered).

NB: You must supply a valid e-mail address or your entry will not qualify.


Gas Prices Drive Down Inflation in December to 1.5%

As I assumed the inflation numbers for the end of the year have gone completely squirrely™ (my new term for numbers manipulated to create a false sense of security) thanks to plummeting gas prices. Given gas is almost 1/2 price compared to 2 years ago, which is nuts, but I just keep feeling this whole thing is a manipulation, but that remains to be seen.

Inflation was around 2.4% (year over year) just a short while ago, now it is at 1.5%, and there is a real chance of it dropping further, if gas prices continue to drop (although I note Diesel fuel prices are not dropping that fast, so the trucking industry or farmers are not basking in the joys of the current low gas prices).

How squirrely are these numbers?

The Consumer Price Index (CPI) rose 1.5% in the 12 months to December, following a 2.0% increase in November.

That is a 25% drop in one month for the year over year inflation numbers, pretty big, but what does it really mean?

CPI Past Little While

The 12-month change in the Consumer Price Index (CPI) and the CPI excluding gasoline

You can see without the gasoline, inflation continues to run above 2.0%, which is worrying, isn’t it? I bet you are asking just how much did Gas drop these past 12 months?

On a monthly basis and before seasonal adjustment, the gasoline price index fell 9.8% in December. Between June and December 2014, gasoline prices decreased 24.6%. In comparison, prices for gasoline declined 42.7% between June and December 2008.

Gas prices for past little while

Gasoline prices continue to fall in December

That is a bloody big drop. The graph shows how big a drop it was:

How does this all look in the big basket? This is the measure of the actual price over time.

Seasonally adjusted CPI

Seasonally adjusted monthly Consumer Price Index

Bank of Canada’s core index

Remember the Bank of Canada has their own way of measuring things, and they seem to not be taking gas into the equation (as much):

The Bank of Canada’s core index rose 2.2% in the 12 months to December, after increasing 2.1% in November.

Interesting that they lowered interest rates even with Inflation at 2.1%?

The Big Table

Let’s have a look at one of the big tables to see what has gone up in price

Consumer Price Index, major components and special aggregates, Canada – Not seasonally adjusted

Relative import1 December
Nov to Dec 2014 Dec 2013 to Dec 2014
% (2002=100) % change
All-items Consumer Price Index (CPI) 100.002 122.7 125.4 124.5 -0.7 1.5
Food 16.60 132.5 136.9 137.4 0.4 3.7
Shelter 26.26 129.9 132.8 133.0 0.2 2.4
Household operations, furnishings and equipment 12.66 114.7 118.2 117.8 -0.3 2.7
Clothing and footwear 5.82 89.4 94.7 91.1 -3.8 1.9
Transportation 19.98 128.5 127.7 124.9 -2.2 -2.8
Health and personal care 4.93 118.1 119.9 119.6 -0.3 1.3
Recreation, education and reading 10.96 105.3 106.8 106.1 -0.7 0.8
Alcoholic beverages and tobacco products 2.79 141.2 149.4 149.1 -0.2 5.6
Special aggregates
Core CPI3 84.91 121.0 124.1 123.7 -0.3 2.2
All-items CPI excluding energy 91.44 119.9 122.9 122.5 -0.3 2.2
Energy4 8.56 158.9 156.5 148.7 -5.0 -6.4
Gasoline 4.62 179.7 166.2 149.9 -9.8 -16.6
All-items CPI excluding food and energy 74.85 117.1 119.8 119.3 -0.4 1.9
Goods 48.18 113.8 116.2 114.6 -1.4 0.7
Services 51.82 131.7 134.5 134.5 0.0 2.1

1.2011 CPI basket weights at January 2013 prices, Canada, effective February 2013.

2.Figures may not add up to 100% as a result of rounding.

3.The Bank of Canada’s core index excludes eight of the CPI’s most volatile components (fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; fuel oil and other fuels; gasoline; inter-city transportation; and tobacco products and smokers’ supplies) as well as the effects of changes in indirect taxes on the remaining components. For additional information on the core CPI, consult the Bank of Canada’s website.

4.The special aggregate “energy” includes: electricity; natural gas; fuel oil and other fuels; gasoline; and fuel, parts and supplies for recreational vehicles.


CANSIM tables 326-0020 and 326-0031.


Money and Twitter Mixing

Another installment of the best financial tweets of the week. I continue to try to figure out whether I need to cut down the number of folks I follow or find a smarter way to get to the important tweets of the week.

Given this was a week with the Bank of Canada cutting interest rates, oil price shenanigans and King Abdullah’s passing the twitter verse did have a lot of interesting stuff.

The Media Maven of Money (Preet B.) started flexing his financial chops with a very interesting set of simulations to try to answer the time-honored question, is it better to buy your house, or rent and invest your money?

Is King Abdullah’s passing a sign of changes in the Middle East? That remains to be seen

This is why you should have the Bank of Canada on your Twitter Feed. You should read their policy stuff yourself, it’s not long and usually the “talking heads” leave major portions out.

Given gas is so darn cheap are you putting more money in your savings? One point of view of what is happening down south

Wasn’t 1-2-3-4-5 the password on Spaceballs? Yeh, some amazingly interesting passwords out there

Did you give over the holidays? Maybe it’s time to start thinking about that?

A bit of shameless self-promotion to end things off, I am on another list of bloggers you should read (along with some other interesting folk).


Looser Money, Plummeting Loons and #BestThisWeek

The Bank of Canada threw us all a knuckleball this week when they announced a quarter point drop of their key overnight rate (on Wednesday). The rate is now at 3/4% dropping a 1/4, and it seems the Bank assumes the economy needs even more stimulus.

The telling statement from their announcement is the final paragraph of their statement:

The oil price shock increases both downside risks to the inflation profile and financial stability risks. The Bank’s policy action is intended to provide insurance against these risks, support the sectoral adjustment needed to strengthen investment and growth, and bring the Canadian economy back to full capacity and inflation to target within the projection horizon.

Money RESP

Shrinking Money (never machine wash money)

This suggests that the very commodity reliant, Canadian economy is going to take a hoof in the “lower abdomen” thanks to plummeting oil prices. Lower inflation, but higher unemployment seems to be on the event horizon.

The Canadian dollar continues to plummet, thanks to very low oil prices, which may slow down the cross border shopping insanity that has been going on for the past little while. Maybe we shall see more of our American family dropping by in Canada this summer? Is this lower interest rate simply going to accelerate the drop of the Dollar’s value? Some experts feel this is going to cause a Canadian dollar back around the 70 cent level (compared to the US dollar), we shall see whether that comes to pass.

My Writings for Week Ending January 23rd

The cold of Ottawa in January constantly begs the question, why do we live here? :

  • I had another run at some of the Best Financial Tweets of the week. I thought I wasn’t going to be able to find many, but the real problem is, there are too many, and my Twitter feed is too large (I miss far too much).
  • I did finally get my money out of the TD RESP account for my daughter, but it took longer than I wanted and I highlight the issues I created by trying to use lower MER Mutual funds with TD E-series RESP Bear Trap.
  • How do you eat an elephant ? Here is an idea, don’t order the frigging elephant!!
  • RESPs are too hard for Mommies? My regular readers could spot the Swerve title, but I am just not too sure why I have seen so much mainstream media (TV) pushing this Giraffe & Friends RESP thing, and yes, Mrs. C8j was really quite insulted by the pitch.

Scotia Bank Value Visa

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