Giving your child the best start in life by giving them access to quality education often requires an educational savings plan that doesn't strain your finances. While there are plenty of options when it comes to financial planning for your child, we break down five ways to get started when it comes to saving for your child's education.
Public or Private education
What type of education you would like your child to receive will affect how much you need to put away. It is ideal to set aside money for your child's education before they are born. However, you can still start when they are still young to make sure that you can cover the various costs when it comes to giving them quality education. Choosing private and public schools can differ when it comes to costs, with parents who send their children to private schools forking out an average of R3 million from primary to tertiary. Public schools could cost you R1 million. Therefore, having the necessary financial plan in place to cover these costs is essential.
Speak to a financial advisor
Once you have decided whether you want to take the private or public schooling route, it will make it easier when it comes to researching costs and planning your finances around your child's education. It is also crucial to keep the extra costs in mind that fall outside of school fees. The average South African parent spends R10,000 or less to support their child outside of school fees. Speaking to a financial advisor can help you plan according to what will work with your finances and set realistic targets that will make it easier for you to reach.
Educational savings plan
There are plenty of education plans on offer by a range of financial service providers, but which one is the best one for you? Choosing an education plan that aligns with the educational goals you want for your child is the first step. Assessing the features to see if they offer a better return for what you hope to achieve can also make selecting a plan easier for you. Having life insurance in place is also crucial to protect you and your child, ensuring that their educational needs are taken care of no matter what happens to you.
Tax free savings
Putting aside money in the form of using a tax-free savings account or unit trust to build more financially in a set period is also an alternative to consider. Tax-free saving accounts allow you to earn interest on the amount you put aside without having to pay tax when you do decide to withdraw it at the end of the period that is set on your account. However, unit trusts can also be beneficial for parents who want to invest an amount that they can draw upon whenever they need to. It is vital to assess both the features along with terms and conditions that come with the options to get the best option that is beneficial for your financial goals.