We all want the best for our children and for them to have the best possible life. The best way to do that is to provide them with a good education.
On average, university graduates with a bachelor’s degree earn around 60% more per year than someone with only a matric certificate. Clearly, one of the best investments you can make for your children is an investment in their educational future.
You may think you'll be able to put away enough cash in a savings account or will simply take out a bank loan when the time comes but you might want to reconsider that position. An ordinary, non-specialised bachelor's degree currently costs around R30 000 per annum. Add to that accommodation or residence fees, travelling expenses, your child's (or childrens') car and insurance repayments, food, clothing, pocket money and you won't spend a lot less than R50 000 per year. A three year university degree right now could easily end up costing you R150 000 or more!
Getting an education loan from a bank could leave you or your child with a debt of R90 0000 or more, before interest is added -- and before the graduate has found a job and earned a cent! With interest charges you will end up paying almost double that.
Specialised degrees, for example, medicine cost over R300 000.
That is now. The bad news is, tertiary education costs will continue to rise.
Your two-year-old’s future bachelor's degree that, today will set you back R150 000, will in 15 years cost over R500 000 if fees increase by 8% p.a.!
And remember, there are going to be many other school and education costs you'll have to meet along the way.
But don’t despair. Even without time on your side — if your children are teenagers, for example — a sound investment strategy, coupled with knowledge of other university financing options -- a bursary for example -- may put your children on the road to a valuable university degree.
Invest early and on a regular schedule
As with any large savings goal, it’s best to start investing early and often for secondary or tertiary education. In partnership with your financial adviser first, set your goal: Figure out how much you will need to save for each child based on his/her age. Then, develop an investment plan and stick with it.
It is important to review your education financing plans on an annual basis to determine if any adjustments need to be made.
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