The start of each new school year always requires a considerable amount of financial planning. Unfortunately, some parents are forced to make the decision of not sending their child/ren to the school of their choice, or a tertiary institution, due to a lack of funding. In fact, according to the latest Stats SA General Household Survey, 33% of individuals interviewed, between the ages of 5 – 24, indicated that a lack of money was the reason they were not attending an educational institution.
1Life shares insight into some options available for parents:
1.FUNDISA
Fundisa – is a government sponsored, education focused savings scheme. This scheme will fund your child’s tertiary education, but also give you a bonus amount, of up to 25% of the money you save each year, to a maximum of R600 per child, just for saving towards your child’s education. To qualify, you need to be a South African citizen or permanent resident, with a combined household income not exceeding R180 000 per annum. Your child also has to be a South African citizen.
2. EDUCATION POLICY
An education policy is usually offered through a financial services company and allows you to make a monthly fixed payment, into a structured savings plan, which grows in value over the years. You will be guaranteed a set amount of money when your child reaches the age for entry into college/university (usually 18 years and above), which can be used to pay for tertiary education.
3. UNIT TRUSTS
A unit trust is a flexible investment product, offered by registered financial services companies, which allows you to invest your money. You are able to contribute a fixed monthly payment. While you can get early access to your money, in as little as 5 days’ notice, should you need it, so if you are saving for your child’s education, you need to be financially disciplined.
4. ENDOWMENT POLICY
An endowment policy is a long term savings plan that allows you to put money away every month, or even on an annual basis, and only pays out after a specific term or age limit. The advantage of using this for your child’s tertiary school requirements is that the minimum term for a typical endowment product is five years* – and any parent wanting to plan their children’s tertiary education way in advance, is able do so.
This process may seem complicated, but it’s as simple as contacting a reputable financial organisation that offers a free financial needs analysis, which takes your current income, financial obligations and needs into account – to understand the type of protection you and your family need. It will also indicate how much you should be investing towards a certain goal – e.g. your child’s education.
So start planning and remember that making the right financial decisions now, will mean you reap the benefits later – your child’s educational future is a worthwhile investment.
