You want your children to have the best education possible, yet school and university expenses and fees can be costly. The money you spend on your kids' education could be one of your family's biggest expenses.
Starting to save early will help your children have a high-quality learning experience.
Work out how much money you need
How much money you need will depend on whether you want your children to go to public or private schools and whether they plan to go to university or college.
For example, if you send two kids to a private high school which costs an average of $20,000 a year for each child, by the time they both graduate you will have spent $240,000 on school fees. And that's not counting extras such as school uniforms, trips and sporting clinics.
Public schools are much cheaper but there are still extra tuition fees, textbooks, uniforms and school camps to pay for.
The cost of going to university or college can also vary. If your child is eligible for HECS-HELP (a government loan available to tertiary students) they can choose to defer payment of university fees. Even if they don't pay fees upfront, your child will have to pay for books and materials, union and sports fees and transport costs. Contact the university or college and find out how much each of these things will cost each semester, so you have an idea of how much money you will need to save. For more information about university fees and payment options see studying.
The earlier you start saving for your children's education, the better. Education costs are usually a long-term goal that can take more than 5 years to achieve.
Smart tip
Never feel pressured to sign up to an education fund. If you are approached by a promoter you should ask for time to carefully read the documents, including the PDS.
Contact Us to discuss ways to help you reach your goals, you could put your savings into:
- Shares
- Managed funds
- Term deposits
- Savings accounts
- Education funds
It’s imperative to get advice before you decide to put your money into any of the saving options above and you should always consider your other financial obligations. For example, you might be better paying off your mortgage or paying down your debts first.
Education funds
Education funds are special funds to help save for children's education. If you are considering an education fund you should check the following to make sure these funds fit your long term financial plan.
Here are some questions to ask before you invest in an education fund.
What fees will be charged?
- Contributions
How much do you need to invest and how often do you need to contribute? Can other people, such as grandparents, also contribute?
- Investment options
What investment options are available, and do the suggested timeframes for these options meet the timing of your children's education needs?
- Fund purchases
What can you use the savings for, for example can you use them for primary, high school or tertiary studies? Do they cover expenses such as clothing, laptops and excursions?
- Access to funds
What criteria need to be met before you can access your funds?
What happens if your circumstances change, and you can no longer contribute to the fund - do you lose all that you have invested? How difficult it is to withdraw your money if your children's priorities change? For example, what happens if your children decide they don't want to do tertiary studies?
Southern Advisory can help you compare the features of an education fund with other investments such as term deposits and managed funds. In particular we can help you compare:
- Product fees, features and benefits
- How the fund is taxed compared to how other investments are taxed
- Saver Plus – A program to help families on low incomes develop a savings habit and improve financial skills. Saver Plus can help you set a savings goal and help you reach it. When you reach your goal, your savings are matched, dollar for dollar, up to $500.
Need assistance?
Education is important but expensive. There are many things you can do now to help secure your children's educational future. If you need help with a financial plan to save for your children's education, contact a Planner at Southern Advisory on 02 9524 6711 or [email protected]
Source: www.moneysmart.gov.au
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