Aug 29, 2017

Out Insights...

Education is a crucial investment but also the biggest expense facing Australian parents these days.

Paying for school doesn’t just stop with tuition fees. If you’re a parent, you’ll also have to shell out for:

  • Uniforms

  • Textbooks

  • Supplies

  • School trips

  • Extracurricular activities

  • Transportation

  • Mobile phones

  • Contributions for school events

And likely, much more.

How can you afford all of this?

Calder Wealth Management has some tips.

Which School?

Education expenses depend on where your child goes to school. A public school is cheaper than a private one, but even the private schools have varying costs. On average, it costs parents around $55,000 to educate their kids in a public school. Putting kids through private schooling can cost upwards of $450,000.

It’s estimated that it takes parents around five years to save up for their kids’ education. If you want to shorten that time, then you’ll want to shop for a cheaper school. Do your research by calling educational institutions in your area to find out their prices. Ask what is and is not included in that quote.

Government Help

When it's time for University, your son or daughter may qualify for HECS/HELP. This assistance won’t cover expenses like meals or transportation, but it can defray the initial tuition expenses. Your family will have the freedom to pay off the educational costs at your convenience.

Reassess Your Priorities

Many people want to start saving for their kids’ education funds from the day they’re born. It’s good to plan ahead, as much as possible.

It may actually be smarter to pay off your home or eliminate debt first. Prioritise the more pressing expenses and then you’ll be able to more easily save up for educational costs. Of course, seek advice from an experienced adviser about this.

How To Save For Your Kids’ Education

Savings options include:

  • Savings account (ideally with a good interest rate)

  • Shares

  • Term deposit

  • Investment bonds

  • Education funds

Educational funds are popular because they let you save up in a gradual and affordable manner. You can draw down the funds directly to a school, as needed. But a word of caution is necessary: just because these funds have the word “educational” in the title doesn’t make them the best option for you.

An educational fund can have unexpected fees and limitations. Make sure you understand all the fine print before deciding to use one.

Another method to consider is increasing your mortgage payments. By doing so, you reduce the interest you pay while building your home’s equity. This equity can in turn be tapped into to fund your child’s education savings.

Teach Your Kids To Save

As soon as children learn that money has value, they do well to learn how to save it. Money isn’t an unlimited asset. If children don’t appreciate how easily it can be lost, they probably won’t appreciate the highest quality of the education you can provide.

Kids should start learning how to save by collecting coins in a small plastic bank. As they get older, they’ll learn how to budget and prioritise expenses. By the time they are in college, they’ll be prepared to help you afford their education.

Giving Your Kids Every Advantage Is Easier Than You Think!

Determine your priorities, make a plan, commit to saving, set up a budget and stick to your goal. You can successfully afford a great education for your children! Calder Wealth Management’s financial experts are happy to help you figure out the best way to afford the education your children deserve.

For smart saving strategies and more tips on building your wealth plan, talk to the team at Calder Wealth Management. Call us on (08) 8373 3333 to schedule your appointment.

Written by Ben Calder, Private Client Adviser at Calder Wealth Management.