Schools have finally reopened and a collective sigh of relief from parents can be heard across the country. The coronavirus pandemic has truly brought home the important role that schools play in the welfare of our children, but education remains expensive. And with the return to the classroom comes the return of other expenses, such as travel and uniforms.
“While a good education is an important stepping stone in our child’s future, it is costly,” says Abulela Gazi, Head of Client and Business Solutions at Metropolitan.
“Education inflation – which is the rate that education increases each year – is currently pegged at 4,1%. However, it is important to keep in mind that, thanks to the pandemic, this is the lowest it has been in thirty years. As things slowly start to return to normal, we can expect this to climb once again.”
Crunching the numbers
How much can a parent then expect to pay for their child’s schooling?
Stats SA has revealed that since 1990, education costs have increased at around 13% a year, while day-to-day living expenses have risen by approximately 7%.
“If your child starts grade R at a public school this year, you can expect to pay at least R600 000 in total for their schooling all the way up to Matric,” explains Gazi. “This amount is significantly more if your child chooses to study at a university or college, or if you have more than one child. Don’t forget that this amount only covers their tuition. It doesn’t take into account extras, such as textbooks, stationery, and uniforms, which also add up.”
While it may seem daunting, Gazi believes that it is possible to give your child a good education without breaking the bank. He shares a few tips that will help you get started.
The three golden rules of saving
What do you need to keep in mind when it comes to saving for your child’s education?
There are three golden rules – start early, be consistent, and don’t touch your savings for as long as possible. Yet, while it is never too early to start saving for your child’s education, Gazi believes that it is also never too late.
“Putting away a little every month – come rain or shine – and giving it the runway it needs to grow, will allow you to benefit from compound interest. This will go a long way towards helping you cover your child’s tuition, as well as the other expenses that arise along the way,” he says.
Engage the power of the collective
You have good people in your life so lean on them. Instead of gifts for birthdays or holidays, why not ask your family and friends to donate whatever they were prepared to spend on a present towards your child’s future education? This is far more meaningful and will make a real difference in your child’s life, unlike a new toy or outfit which they will outgrow in a matter of months.
You will see how all of these contributions add up over the years, and go a long way towards securing your child’s future.
Be smart in your savings strategies
Be realistic with yourself. Even if you start saving when your child is in nappies, you will likely struggle to save enough money to cover the total cost of your child’s education from the time they start school until the time they are in Matric. Your child may also be well into their school years before you start saving. This doesn’t mean it is too late or that you won’t benefit.
“Be clever in your goals and strategies,” Gazi suggests. “Consider aiming to save enough to cover the shortfall between your annual salary increase and the annual increase in school fees, for example. You can safely expect that the rate at which school fees increase will be more than your annual salary increase (which is usually linked to inflation), so aim to cover this gap. If you’re expecting a promotion or bonus, consider putting a portion or all of it towards your education savings.”
Another tactic is to take advantage of your school’s early payment discounts. If you’ve been diligently saving, consider accessing some of your savings to pay your fees upfront at the start of the school year. You will then be able to cross ‘school fees’ off your monthly budget for the remainder of the year.
Find the right savings plan
There are a few things to look for in a savings plan when it comes to your child’s education. Search for good value in the form of low fees and a decent interest rate. If there is an option to chat with a financial adviser who can help you structure your savings goals, then all the better.
