When I was growing up, my parents used to encourage me to set my sights on one of the big five careers; Doctor, Dentist, Lawyer, Teacher or an Accountant. Your options were limited and your path set at an early age.
Fast forward 30 years and consider how you’re reading this post. On the internet, probably on a cellphone – social media didn’t exist 15 years ago, and it spawned an entire new industry in the last decade.
The point is – we’re preparing our children for jobs that don’t even exist yet. And their best tool will undoubtedly be a good education.
Below are a few ways that you can start planning today in order to ensure their success tomorrow.
1. If you only start saving when your child starts Grade 1, it’s already too late!
We know you’ve heard this plenty of times, however it can’t be repeated enough! The earlier you start saving for their education, the smaller the impact is on your budget. Depending on the institutions’ fees (best your little one not end up at Julliard, because then you’ve got problems) and future education inflation, a new parent needs to save at least R800 per month, preferably more, to confidently cover the total cost of a High School Education at a good school. If you only start saving when your child starts Grade 1, you’ll need to put aside almost two and a half times as much every month from then on.
2.Education inflation is real…
Education costs have historically risen by between 9% and 10% each year. Therefore it is possible that the increase in school fees will be more than your salary increase each year. Your first goal should therefore be to save so that you can make up this difference without education taking a bigger bite out of your household finances.
3.Funding the grade gap
Your second goal is to fill the gap between high school and primary school fees, as you will be paying around 20% more once your child starts high school. In fact, even primary school fees often increase with each grade, over and above the normal annual inflationary increases.
As soon as your child starts Grade One, immediately increase your savings by the difference between primary and high school fees. You will then be setting aside a realistic percentage of your salary for your child’s 12 years of education and the savings will supplement the annual fee increases in high school.
4.Protecting the future
When planning for your child’s education; you should also consider an insurance policy to fund any shortfall should the worst happen to you (touch wood it doesn’t) before you’ve put enough aside.
Liberty offers education cover through the comprehensive EduCator benefit which pays school fees directly to your Child’s institution up to their first tertiary degree should you pass away or become permanently disabled.
If you have not started an education savings plan yet, it is not too late. Visit www.liberty.co.za for more information on Liberty’s education investment and policy products.