During every first meeting I have with a new member, I ask about their top five long-term goals. If they have children, saving for their kid’s education usually comes close to the top of the list.

Despite their best intentions three common mistakes are preventing young families from using their RESP (Registered Educations Savings Plan) to its fullest potential.

Pitfall 1: Setting up individual versus family plans

Most people don’t realize that there are two types of RESPs: individual and family plans. While it’s tempting to give each child their own individual RESP to collect government grants, I recommend setting up a family RESP if the family plans to have two or more children.

The benefit of a family RESP is that all the kids are named as beneficiaries of the plan and each individual has access to 100 per cent of the account. While you may be able to transfer unused funds from one of your children to another between two individual plans, in special cases you pay less administration fees with a family plan. A single plan is also easier to manage than multiple ones.

Pitfall 2: Passing up free government money

Setting up an RESP is good, contributing regularly is better, making the maximum contributions each year is best. Why? Only when you make maximum contributions can you take advantage of all the government grants available.

The Canada Education Savings Grant offered by the federal government matches 20 per cent of a subscriber’s contribution to an RESP, up to $500 annually (or $1,000 if there is carry-forward from previous years) to a total of $7,200. In addition, the British Columbia Training and Educations Savings Grant of $1,200 is available only on your child’s sixth birthday, and the Canada Learning Bond is money that the Government of Canada deposits into the RESP of income-qualified families.

Research says that Canadian families contribute on-average less than $1,500 per child annually to their RESPs, which means many people are losing out on free cash.

Pitfall 3: Forgetting it’s an investment

Even members who have taken advantage of the government grants available sometimes fail to treat their RESP like an investment. Many people aren’t aware that an RESP can be structured for growth just like an RRSP. Done correctly, you can reap all the benefits of compound interest, dividend income and capital gains and investment income is not taxed until withdrawn, usually when the student is in a low tax bracket and has the advantage of certain deductions.

The longer the time span you have to save for your child, the more growth-focused the investment can be. For babies, you can have an aggressive approach because there is a 15-year-plus time horizon. For 15 year-olds, the plan should be more conservatively invested.

While these are a few tips to maximizing your children’s education savings, I always recommend seeking the advice of an accredited financial professional to help you reach all of your family’s financial goals.

Stacey Agecoutay is a Wealth Planning Specialist at Valley First, a division of First West Credit Union, in Kelowna. Connect with Stacey at 250-718-7371 or SAgecoutay@valleyfirst.com