Very few things in life are cheap. Children are certainly not one of those things, least of all a decent education that will set them apart in life and give them the edge that you hope will make them successful and happy. This requires careful planning, commitment and wise long-term decisions.
There are many things to consider when choosing a plan to save for your child’s education, including the rising cost of living.
From primary and secondary to tertiary, education is pricey and you will need to ensure you have sufficient funds for a number of years, whether that is for your child to complete matric or to study at university – which can stretch beyond an undergraduate degree.
Neil Thompson, head of product and customer value proposition at African Bank, says for parents who are wise enough to start putting away money early, the burden of tuition costs will be less. While it doesn’t come cheap, and in many cases it won’t be easy, it is possible to save for your child’s education.
Thompson urges parents to follow these five tips:
1. Do not wait too long to start saving
It might seem there is always another expense preventing you from putting money away each month. What is important to remember is the more time your money has to grow, the bigger the benefit, so starting to save early. Sticking to this financial commitment consistently is very important.
2. Do not have a knit-one-skip-one approach to saving
If you are not consistent about the contribution going into your education savings plan your dividends will reflect this. The best way to save is to have a debit order coming off your account into a tax-free savings account – the “debit it and forget about it” method.
3. Seize all opportunities to save
Think about how many birthdays your child has had/will have. Why not introduce a student savings account for when your child is older and ask close family to make a contribution to this account instead of buying them a gift? There are many friends who can bring gifts but let your close family help you support your children’s future. In addition, sacrifice something on your shopping list every second month or so and instead put that R40 or R50 towards your child’s schooling.
4. Do your homework
Ways to grow your savings are plentiful but not all will deliver on their promises. It is important to speak to someone who knows about making your money work for you. Your needs and goals are unique, so why be boxed in when it comes to investing? Ideally, you want an out-of-the-box thinking financial advisor who will help you understand what will work best. Always ask about the tax implications of saving money and get someone to help you understand the benefits of tax-free investments.
5. Do not dip into your savings
No matter how tough things may get financially, make a commitment to not withdraw any of the money you have put away for your children’s studies. Taking a little here and a little there, over a period of years even, can have a severe impact on the growth potential of your money.