Johannesburg – Many parents make the mistake of believing that they have to wait until their children grow older for them to start saving for ever-ballooning education costs.
The reality, however, is that the best time to start saving for your child’s school fees and university costs is now.
It is crucial to choose an education plan that provides inflation-beating returns in the long term.
This means investing in a savings vehicle that provides capital growth over the medium to long term.
The more time you have to invest your money, the more time it has to grow.
According to Statistics SA data, education fees increased by 4.1% in 2021, compared to 6.4% in 2020.
Shafeeka Anthony from JustMoney.co.za said financial instruments like unit trusts, which offer simple and cost-effective access to the share market through a variety of equities and tax-free savings accounts, are options to consider for saving for your child’s education.
“It’s never too soon to start saving for your child’s education. Even a small amount put away every month will grow over time as compound interest plays its part
“Do your homework and evaluate your options to determine what best suits your family’s financial needs. If you need guidance to ensure your child’s educational expenses are covered, it’s worthwhile enlisting the help of a trusted financial adviser,” says Anthony.
Unit trusts and endowments are ideal if you have 10 to 15 years before tertiary education takes place.
Other tips for saving on school expenses, according to Anthony, include:
- Buying second-hand items: Check out uniforms and sports equipment at your school shop and online sites.
- Scholarships: If your child is a high achiever in sport or academically, enquire about bursaries and scholarships.
- Life insurance: Should you be disabled or suffer from a debilitating illness, or even die, your child’s education could be badly affected. Consider a life insurance or education protection policy, as well as dread disease and disability cover. These will ensure continuity of your child’s education if you are no longer able to provide the finances.
According to a report by Old Mutual, below is the average expected cost of educating a child for one year:
Cost of education in SA by 2025
- Public primary or high school: R63 300
- Private primary school: R154 900
- Private high school: R248 700
- University: R107 600
Cost of education in SA by 2035
- Public primary or high school: R149 800
- Private primary school: R366 700
- Private high school: R588 800
- University: R254 700
For more business news from Sunday World, click here.
Follow @SundayWorldZA on Twitter and @sundayworldza on Instagram, or like our Facebook Page, Sunday World, by clicking here for the latest breaking news in South Africa. To Subscribe to Sunday World, click here.
Sunday World
