Oct 30, 2025
Maya is 14, and over the past few years she has quietly built up a sizeable balance in her chequing account from babysitting jobs. Rather than spending it all on Venti lattes or yoga pants, she has kept it safe in savings.
Her mom, Rebecca, has already started saving for Maya’s post-secondary education and is maxing out her registered education saving plan (RESP) contributions. She wants to help her daughter make the most of her babysitting money — whether it’s for a future car, contributing to school or simply letting it grow over a lifetime. Importantly, Rebecca wants to keep some of it accessible so Maya can still spend a portion on something special if she wants.
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This is a common scenario for Canadian families. As children earn and save their own money, parents often look for ways to help them invest responsibly while giving them a sense of ownership — while teaching financial literacy in the process.
What minors can and cannot do in Canada
Maya cannot open a Tax-Free Savings Account (TFSA) yet. According to the Canada Revenue Agency, to open a TFSA you need to be at least 18 years old, and Maya is still a few years away from that, and that is valuable interest earning time.
That leaves other options:
1. Registered Education Savings Plan (RESP)
An RESP is a government-registered plan designed to help families save for a child’s education after high school. Rebecca can contribute on Maya’s behalf, and the money inside grows tax-deferred — meaning investment income isn’t taxed until it’s withdrawn, typically when the student has a lower income.
RESPs also offer a major incentive: The federal Canada Education Savings Grant (CESG), which matches 20% of annual RESP contributions, up to $500 per year. Since Rebecca is already maxing out her contributions to capture the full CESG for Maya, any babysitting money added to the RESP wouldn’t earn extra grant money — but it would still benefit from tax-deferred growth and the power of compounding.
Financial planners often emphasize the RESP as a cornerstone of long-term family saving because it blends government support with steady, tax-efficient growth.
2. Non-registered investment account held in trust
Because Maya is a minor, she can’t legally hold most investment accounts on her own. A non-registered in-trust account allows Rebecca to invest and manage Maya’s money until she reaches the age of majority. These accounts don’t come with tax advantages, but they do offer flexibility: The funds can be withdrawn at any time and used for any purpose.
Earnings inside the account are taxable — interest and dividends are generally attributed to the parent, while capital gains belong to the child — but the accessibility makes it appealing when balancing long-term investing with short-term needs.
In other words, this is the “flexibility bucket” — ideal for goals like a first car, hobby equipment or other meaningful purchases before adulthood.
3. Other possibilities
- High-interest savings accounts for low-risk, short-term growth
- GICs (Guaranteed Investment Certificates) for secure, fixed-term returns
- Junior investment accounts offered by some banks, often with low fees and educational tools
These options can complement RESP and in-trust accounts, creating a layered plan that meets both short- and long-term goals.
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Starting with $5,000 and the power of compound interest
Maya has $5,000 in savings. Before investing, Rebecca considered how different choices could impact that money over time. A key concept here is compound interest — when your money earns returns, and those returns start to earn additional returns.
Even modest growth rates can make a big difference. For instance, $5,000 earning 5% annually could grow to more than $8,000 in 10 years, and over $13,000 in 20 years. At 7% annual growth, the same balance could reach roughly $9,800 after 10 years and $19,300 after 20.
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The takeaway: The earlier the investing starts, the more time there is for compounding to work its magic.
Balancing growth and access
Rebecca decided that a blended approach makes the most sense for Maya’s $5,000. Because Maya’s education fund is already being built through the RESP, Rebecca wants this money to serve multiple purposes — partly long-term, partly flexible.
The RESP is still featured in her scenarios because, while not tax-free, its tax-deferred growth allows savings to compound faster than they would in a taxable account. Meanwhile, an in-trust account gives Maya the freedom to use some of her earnings sooner, while still keeping the rest invested for growth.
RESP for long-term growth
- Most of Maya’s $5,000 goes here
- Grows tax-deferred until withdrawal for post-secondary education
- Even without extra grants, compounding can significantly boost returns
Non-registered in-trust account for accessible savings
- A smaller portion goes here, invested in a diversified, low-cost index ETF
- Maya can access funds in the near term for personal goals, like a car, clothing or hobbies
- Growth is taxable, but the funds remain flexible
Weighing the outcomes
Rebecca is relying on growth snapshots to illustrate potential outcomes to help her decide what is best for Maya and the savings she's built up:
Scenario 1: $4,000 RESP / $1,000 in-trust
The RESP portion could grow to about $10,600 in 20 years at 5% annual growth, while the in-trust portion might reach $2,650. This keeps most funds earmarked for education, with a smaller amount accessible anytime.
Scenario 2: $3,000 RESP / $2,000 in-trust
A slightly more flexible mix. The RESP grows to around $7,950, and the in-trust to $5,300 — balancing education planning and personal goals.
Scenario 3: All $5,000 in-trust
Fully accessible, no contribution restrictions. At 5% over 20 years, it could reach $13,266 — but without RESP tax advantages or government grants.
Through these examples, Rebecca is teaching Maya one of the most valuable financial lessons: how to weigh trade-offs between accessibility and long-term growth, and how small decisions today can shape bigger outcomes tomorrow.
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Teaching financial literacy along the way
Rebecca’s approach is tailored to her family’s needs. What works for them may not be the best option for every parent or teen — the right balance depends on goals, comfort with risk and how much flexibility is needed.
By involving Maya in these decisions and reviewing progress each year, Rebecca helps her understand investing fundamentals, see how compound growth works and appreciate the value of patience and planning.
This is exactly how financial literacy begins — through real-world decisions that connect money to meaning.
Final word
Rebecca’s approach shows how families can help minors grow savings responsibly. The key is to:
- Understand what accounts are available to minors and their limits
- Balance long-term growth with short-term access
- Diversify investments to manage risk
- Keep kids involved to build confidence and knowledge
Whether Maya’s savings eventually go toward a car, a college fund or her first home, she’s learning early how to make money work for her — and that’s a lesson that pays off for life.
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Leslie Kennedy served as an editor at Thomson Reuters and for Star Media Group, followed by a number of years as a writer and editor and content manager in marketing communications, before returning to her editorial roots. She is a graduate of Humber College’s post-graduate journalism program and has been a professional writer and editor ever since.
