We all have dreams for our children; in fact our children have their own dreams and ambitions. Whether your child wants to become an astronaut or the next president, as a parent, you want to be financially prepared to give your child a chance to realise their dreams.
Liezel Gordon, mother of three and Marketing Manager at Metropolitan says “School fees, stationary, textbooks, uniforms and extracurricular activities can leave a gaping hole in your budget. Your education spend only continues to rise after primary and secondary schooling – funding a decent tertiary education is a costly affair. Most matriculants who decide to study after school depend on their parents to pay for their fees. Others choose to take out student loans, where graduates may pay up to three times more than their study fees in interest (percentage added to the loan).”
Liezel explains, “It can be stressful for a graduate to repay a loan when they have just started working or are still looking for a job. Most students work part-time to pay for their studies; however, the pressures of studying and working can be overwhelming. An education plan can help ease the financial burden of tertiary education tuition fees.
Planning ahead is key to successful education savings. Here are five tips to consider when saving for your child’s education:
Make education savings part of your budget and set a goal
Making education savings a goal – with a fixed deadline – encourages you to become a savvy spender. Putting money aside for education each month allows you to adjust to living on a tighter budget. The more disciplined you are about this the easier it becomes.
Rising cost of education
Keep in mind that your education savings should keep up with inflation. It is advisable to increase the amount you save by a minimum of Consumer Price Index (CPI) plus 4% per year, to cover rising school fees and related costs. Generally, if inflation is at 6%, then education inflation will be around 10% (CPI of 6% + 4%).
The sooner the better
It is never too early to start saving for your child’s education…from birth is preferable! The sooner you start the less money you have to save each month to reach your end goal and the smaller the impact on your monthly budget.
Use an education plan to protect your money
By saving in an education plan, your money will be secure until you need to access it. Make sure you understand how the different plans work and ensure that the plan you choose meets your needs. For instance, consider whether you need access to the money annually to cover expenses like school fees, uniforms or stationary. Or perhaps you need to save in a disciplined way over a longer period to eventually contribute to studies after school.
Speak to a financial adviser
A financial adviser can do a free, no obligation and confidential financial needs analysis to help you identify and prioritise your needs, as well as recommending product solutions to fit your pocket. With an adviser’s guidance you can make an informed decision before choosing an education plan best suited to your needs.
