12 Oct Get a head start – start saving for your child’s education
We all want the best for our children and this means giving them a good education to ensure that they become both financially independent and fulfilled in whatever career they choose; and being a mom to a 1.5 year old son I know this all too well.
Not only do parents have to worry about their emergency funds, paying the bond, saving for retirement and just the daily grind of making a living; they’ve got to worry about the rising cost of education too. While we support the movement of #FeesMustFall, parents cannot rely on free education for their children.
According to StatsSA, the cost of tertiary education is rising by an estimated 9% to 12% each year. Another study done by Old Mutual estimates that if a child starts Grade R in 2016/2017, a complete education – including primary school, high school and three years of university – will cost just under R1 million for public school tuition, or R2,2 million for private school tuition.
Clearly education is not cheap. So what recourse do parents have to ensure their child’s education is provided for? The answer is start now! (I know you’ve heard that before…but it’s true). Regardless of whether you are planning on having a baby, expecting one or you already have one, today is a good day to start putting money away for your child’s education, and it doesn’t matter how small or big the amount is; as long as you start now. Compound interest will work in your favour. Go to a previous article http://womanandfinance.co.za/saving-vs-investing/ to look at the power of compound interest.
If you want to start focusing on your little one’s Education fund, I recommend looking at the following investments:
- Tax-free savings account
- Unit Trust and Exchange Traded Funds
Endowments are offered by life insurers e.g. Liberty, Discovery, Momentum etc. they have a five year term to them, but if you wish to draw funds from the investment before the five year period ends, there are penalties. Clearly Endowments do not offer the same flexibility as Unit Trusts but you are saving for your child’s education here, so the money is not to be touched! Therefore this type of investment is suitable for those parents who are have a lot going on and discipline is a little hard to come by!
Obviously there are other options we can discuss that speak to funding education but for a beginner into the world of investing, the above is the basic and starting point.
So, parents and parents to be, eliminate stress at a later stage by making your child’s education a priority right now. Jot down a few tips from here and start the journey for your child’s success.