It’s never too early to start saving for your child’s education
Whether your child is still in nappies or entering Grade 1, it's important that you start saving for their education as soon as possible.
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It’s hard to imagine that one day your newborn baby will be standing on their own two feet – ready to take on the world! The truth is, time flies by very quickly and before you know it, your tot is out of nappies and starting school.
If you haven’t saved for their education over the years, you could land up facing a huge financial dilemma, especially if you choose to enrol your child in a private school. In some cases, you may be forced to lend from the bank to pay school fees and land up in debt.
While it’s never too late to start saving for your child’s education, it’s never too early, either.
“We sometimes find it difficult to prioritise education savings because of urgent financial commitments. Very often paying off a house bond, utility bills, medical and grocery expenses take priority,” says Wilfred Moyo from Metropolitan.
Don’t underestimate the cost of education
Many people make the mistake of underestimating the expensive and long-term commitment to providing a quality education for your child. Primary and tertiary education can cost in excess of R1 million for tuition fees only. Parents are still expected to pay for textbooks, stationery, uniforms, and travelling expenses, which can add up to a substantial amount.
When and how should you start saving?
“Ideally, you should start saving for your child’s education when you are still in the planning stages of having a child. By starting this early, you can benefit from the compound interest on your savings over time,” says Wilfred. “However, sometimes a Plan B is necessary if we find ourselves in a position where we are only able to start saving for our child’s education later than we would have liked.”
A short-term (five years or less) savings vehicle could be the answer, such as fixed bank deposits. “These offer a slightly higher return than a normal bank account. However, the return you get may be eroded by education inflation,” cautions Wilfred.
For a savings period of five years or longer, you can consider unit trusts, Exchange Traded Funds (ETF), savings products from insurance companies, or direct investments (investing directly in the stock market).
“It is natural for every parent to want their kids to have it all; to live a good life without the financial burden and to be able to land their dream career,” says Wilfred. “A good education is the only way to ensure that your kids have a chance to achieve this.
Better late than never
“It’s never too late to start to start saving for your child’s education – better late than never,” says Wilfred. “A financial adviser can do a free, no-obligation, and confidential financial needs analysis to help you identify and prioritise, as well as recommend solutions to fit your pocket. With an adviser’s guidance, you can make an informed decision before choosing a savings plan that will help you finance your child’s education.”