Most parents strive to provide their child with a good quality education that will give them the edge and relevant skills to cope in our fast-paced and evolving world.
However, this comes at a high price, with education inflation estimated as high as 9.5% a year.
“This means that a parent whose child starts grade R in 2019 can expect to pay between R1m and R3m for public or private education including three years’ tertiary education,” says Mduduzi Luthuli, investment manager at Luthuli Capital.
These figures are daunting and don’t even include extra costs like stationery, transport and extramural activities. What’s worrying is that at least half of South African parents are not saving for their children’s education, but expect them to support them in old age, according to Old Mutual’s 2018 Saving and Investment Monitor.
“The best strategy is to keep it simple. The cheapest way to pay for an education, or anything for that matter, is to invest for it,” says Grant Locke, head at Outvest, which offers an easy-to-use, app-based investment.
Locke says you should ideally start saving for your child’s education from birth and pay for all fees from the investment or invest for later education and pay for their earlier years from your salary.
However, even if you do start late or are only able to save a small amount each month, you’ll still be better off than not saving at all.