Tag Archives: saving

Saving for the Kids’ Education

Preparing for higher education

Like most parents, you want your children to have the best education possible, yet school and university expenses and fees are undeniably costly. The money you spend on your kids’ education could be one of your family’s biggest expenses.  Depending on where you’re based, it may be right up there with your Mortgage repayments.

Not that many of us begrudge the spend, viewing it more of an investment in our children’s futures.

Some will need to decide whether 12 years of formal schooling will be undertaken in the private space or whether just the high school years will be funded.  Others are also happy to help with University costs and some allow Fee Help (formerly known as HECS) to pick up that tab.  Whatever you choose, there’s costs attached and it’s best to be prepared.

Once you’ve worked out your family’s preference, starting to save early will help your children have a high-quality learning experience.

It pays to do your homework.  Research what schools in your area charge each term so you have an understanding of what is required.  Will you need to move to be in the catchment area of your preferred school?  Do you know other parents or students of the school you can ask for testimonials about their experience there?  Do you need to register your child years in advance to get into your preferred school?  Knowing your costs early will give you greater time to save and help avoid disappointment.

The decision to send your children to public or private schools and then to university will determine just how much you need to put aside to start saving.  Despite your wishes, it’s also hard to know whether your children will want to go on to University until they’re some way into their academic career and begin to form some idea about what they’d like to do for a living.  Will a gap year needed to figured into the equation with money for travel?  Or will they fund that by working a part-time job from when they’re able.

What will you need?

As an example… if you send two children to private high school for six years each, which costs around $20,000 a year for each child, by the time they graduate you’ll have spent $240,000 on school fees. And that doesn’t take into account any extras like school uniforms, textbooks, trips and excursions, tutoring, extra-curricular activities, sporting clinics and the like.  This could see costs closer to $275,000 by the time they’re through.

If you only wish to save only for high-school years, you’ll have around 11 to 12 years to save for each child.  If the figures seem out of reach, you may need to rethink what you have to put aside, or review the schools your child will attend.

Public schools are much cheaper but there’s still no such thing as ‘free education.  There are extra fees for textbooks, uniforms, trips, stationery and school camps to pay for. These can easily add up around $1,000 per annum.

Trade Colleges are dearer than public schooling but for those looking to enter trade’s or take over dad’s business, these can be a great option for later high school years.  Often they’re around $4 – $7,000 and only two years is required.

The cost of going to university or college can also vary. If your child is eligible for HECS-HELP (a government loan available to tertiary students) they can choose to defer payment of university fees until they’re earning a living.  Entering the work force with large student loans may not be ideal, but in many cases is unavoidable.

Even if you (or they) aren’t paying upfront tuition fees, there’s still books, textbooks and materials, union and sports fees, lunches, accommodation and transport costs. Contact the university or college and find out how much each of these things will cost each semester, so you have an idea of how much money you will need to save.  And if you’re thinking ahead, don’t forget to allow for inflation too.

The earlier you start saving for your children’s education, the better. Education costs are usually a long-term goal that can take more than 5 years to achieve so stashing early is your best bet.

Then, once you’ve got a ballpark figure in mind to reach for, work out where you’ll put that money.  Are you happy with high interest, web based savings accounts and term deposits or want to invest in education funds or bonds for the longer term?  With interest rates at historical lows, it’s hard to find good returns on conservative styles of investments.

If there’s a top tip to getting set for education costs, it would be to research, plan, track and manage your savings goals on the go.  And be sure to review on at least a half yearly basis to make sure you’re on target.

What does a Brighter Financial Future Look like for You?

What lights your fire financially?  Everyone’s financial future looks different.

For some people, it might be as simple as being completely debt free.  Others couldn’t live without an annual holiday.  Many want the security of a small nest egg or emergency fund being available.  Others would love an investment property.  Whatever it means to you, a brighter financial future can start with a few small changes to how you currently deal with money. The key is usually to establish some good financial habits – no matter where you are right now.

What are some steps you can personally take towards a brighter financial future?   Most often, it starts with living within your means, or spending less than you earn.  I’ll outline a few options and suggest you try a couple to begin with and see what a difference it makes in your personal circumstances.

  1. Track your daily spending habits – get a receipt for everything you purchase and pop it on a spike or in a box for a month.  See what’s really going on with your spending!
  2. Begin a budget.  And before your eyes glaze over, there’s plenty of online calculators that can help you, so you don’t need to do it alone.  Try the ASIC MoneySmart option to kick things off.
  3. Review your spending habits – Do you have the best phone plan?  Are your insurances the best value for coverage and cost?  Are your bank accounts and fees cost effective?  Do you have a low cost loan and a good deal on your mortgage?  Can you cancel some subscriptions you no longer need? There’s lots of comparison sites now available to help!  Where can you cut back?
  4. Start clearing debt – work out what’s the highest interest rate across your various debts – quite often, it’s the credit card or personal loan.  Especially if the debt if not tax-deductible, work out a plan to bring it down more quickly.  Paying the minimum each month, you’ll never get rid of what you owe!  As one clears, cancel or reduce the facility and then start directing those funds towards the next debt.
  5. Is it time to start investing?  As your debt comes down and you no longer need to fund those large payments, can these be directed towards an investment portfolio?  Find out if you’re ready to start investing here.
  6. Take care of your future!  Have you given due care or attention to your retirement savings?  It’s easy to put it on the back burner thinking it’s so far off, but it is your money and needs to be nurtured.  Chances are, the Government’s pension plan will be less and less available over time, so taking care of number one should be higher on your list than it likely already is.  And the longer you have to go, the better compounding interest will work in your favour.

Hopefully, these tips will help set you on the way to a brighter financial future.  I’d love to know if you’ve tried one out and let me know how it’s worked for you!