Johannesburg, South Africa- December 03, 2014 – For many
prospective parents, the burden of providing for a child’s education becomes
more and more of a challenge as costs escalate and the general level of public
school education appears to deteriorate. It is not uncommon for a public
secondary school to charge an annual fee of R30 000. This is 150 000 over 5
years, not allowing for increase.
Nursery
and primary education are no less expensive and parents wanting to ensure that
their children receive the very best are going to have to dig deep to make
financial provision for these expenses.
Here
are some examples of what a degree will cost on a yearly basis:
1.
Medicine (5 years) – 52 000 per annum for 5 years escalating at 10% per annum –
317 465 (Fees only!)
2.
Engineering (4 years) – 45 000 per annum for 4 years escalating at 10% per
annum – 208 845 (Fees only!)
So
how do prospective and existing parents plan to provide for this essential part
of their children’s upbringing?
Here
are 10 helpful tips that will go a long way towards easing the burden.
1.
Start putting aside funds from your child’s birth – you only have six years
before the child commences school. In these six years, you can build a
substantial fund. Remember that generally, the older the child gets, the more
expensive the annual costs become.
2.
Cutting your coat according to your cloth - it just may be unrealistic to save
for primary, secondary and tertiary education. Remember that whilst Nursery and
primary education are important, they provide the foundations for the important
secondary and tertiary levels and there are excellent low cost alternatives for
public primary and secondary schooling. It is a myth to say that there are NO
good public schools – you just have to find them. Focus on putting
together a sum for tertiary.
3.
Take advantage of Fundisa - this is a government sponsored, education savings
scheme. Households earning less than R 180 000,00 per annum are eligible for
this benefit, which is used to fund a child’s tertiary education.
4.
There are a number of affordable, flexible investment vehicles on the market
.The real magic is to decide on a disciplined approach to the challenge and set
up a monthly debit order to assist you with the discipline and frequency of
saving.
5.
Family Resources - encourage grandparents, godparents and other family members
to add their contribution to the plan, in place of gifts at Christmas,
birthdays and other events. Suggest to grand-parents and god-parents that
the best legacy they can offer your children is a contribution to their
education. This can even extend to a testamentary legacy in their Will and what
a wonderful gesture that would be!
6.
Growth Assets – Putting money in the bank is one thing, but interest rates do
not realise the sort of growth that such a savings plan demands. A competent
financial planner will advise you that the investment should be in assets that
are going to grow and to this end, he will likely as not recommend something
with growth potential without a very high risk. After all, if you start early
enough, an Equity based investment linked to the JSE will ultimately reward you
with an above average growth rate.
7.
Invest in your own name – Whilst it is your child that will ultimately benefit
from your prudent savings, it is your money and you should exercise whatever
decisions that need to be taken to make it work for you.
8.
Involve your child - Children need to be taught the value of money and the
necessity to save for eventualities. Involve them in the finances and show them
what you are doing for them.
9.
Take advice - history has shown that people who make use of a financial adviser
do 25% better than those who do not.
10.
Evaluate your plan - Circumstances change as the years go by and what was a
good plan last year may be insufficient this year. Involve your financial
planner in all aspects of your educational savings on a yearly basis.
The only real legacy you can provide
for your children in order to help them through the challenges of life is a
good education – make sure that you start early enough to ensure that this
becomes a reality for them and for you.
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