A loving parent wants to ensure the best future for their child. One of the best ways to give your child a head start in life is to help them get a quality education. 56% of South Africans, however, are not saving for their children’s education. This is mainly due to the challenging economic situation in our country and living expenses, such as car repairs, living costs, bills and holidays, often get in the way of parents saving money.
Unfortunately, the cost of education rises faster than inflation – it is 3.5% above inflation at the moment – so, if education seems expensive now, in the future, it will be even harder to cover all the costs. If you have or are going to have a child soon, here are a few tips for saving for your child’s education.
Start saving for your child’s education as soon as possible – if you can, before your child is born. Compound interest definitely plays a role in growing savings, so the sooner you start saving, the faster your money will grow.
Consider taking ownership of the investment
While it may seem like a good idea to invest money in your child’s name, you may want to keep it in your own name. If the money is in their name, once your child turns 18, they can spend the money however they want – and they may not have their priorities set on education at that stage of their life.
Speak to your broker about opening the best savings account for your situation that is tax-free, grows in interest and can be withdrawn when you need it. Also remember, withdrawing savings prematurely will affect the potential of the interest.
Do your homework when it comes to fees
Although private education in South Africa is excellent, the cost to send your child to a prestigious school can be crippling. Decide early on what type of school you’re going to send your child to so that you can save accordingly.
Find the best method to pay for fees
Some schools offer a discount if fees are paid upfront for the year instead of monthly or quarterly. This may be a good offer to take up if the discount is a significant amount. On the other hand, you may want to consider whether you should rather invest the money and pay the school fees in monthly instalments. Often, debt is the deciding factor for parents. If you have to take out short-term debt, such as credit card and retail card debt, it may cost you more than the rebates offered by the school.