The Importance of Saving for your children’s future
All parents have high expectations for their children’s future. Every parent sees their children, progressing to a better more financially secure life than they had. I remember how a lot of parents when I was growing up dreamt that their children would become doctors and lawyers so that they could have a steady income and a more security future. I remember how my parents tried to save everything they could so that my sisters and I could afford an education and have a career.
An unknown Future
The truth is, though, even though parents’ needs to ensure that their children have a better life have not changed, but the world around them has changed. 30 years ago there were no careers such as Bloggers and Vloggers? Today social media is all the rage, look how you are getting your information right now from the internet, who knew this was even in the realms of possibility when our parents were thinking about planning for our future?
The same applies to us now our children’s prospects are way out of our known reality; we are trying to prepare them for careers that do not even exists currently.
All we can give them is a good education and hope they make the best of the opportunities But, for them to have those options they need us to plan better and to save optimally for their education.
Four tips for optimising your saving for your children’s future education
Today we will discuss four ways in which we as parents can do this better
Start Saving Early
Experts say “If you only start saving when your child starts Grade 1, it’s already too late!”
The earlier you start saving for their education, the smaller the impact is on your budget. Depending on the institutions’ fees (best your little one not end up at Julliard, because then you’ve got problems) and future education inflation, a new parent needs to save at least R800 per month, preferably more, to confidently cover the total cost of a High School Education at a good school. If you only start saving when your child starts Grade 1, you’ll need to put aside almost two and a half times as much every month from then on.
Education inflation is real…
Education costs have historically risen by between 9% and 10% each year. Therefore it is possible that the increase in school fees will be more than your salary increase each year. Your first goal should, therefore, be to save so that you can make up this difference without education taking a bigger bite out of your household finances.
Funding the grade gap
Your second goal is to fill the gap between high school and primary school fees, as you will be paying around 20% more once your child starts high school. In fact, even primary school fees often increase with each grade, over and above the normal annual inflationary increases.
As soon as your child starts Grade One, immediately increase your savings by the difference between primary and high school fees. You will then be setting aside a realistic percentage of your salary for your child’s 12 years of education, and the savings will supplement the annual fee increases in high school.
Protecting the future
When planning for your child’s education; you should also consider an insurance policy to fund any shortfall should the worst happen to you (touch wood it doesn’t) before you’ve put enough aside.
Liberty offers education cover through the comprehensive EduCator benefit which pays school fees directly to your Child’s institution up to their first tertiary degree should you pass away or become permanently disabled.
To learn more about Liberty’s Educational Investment Products visit their website www.liberty.co.za
DISCLAIMER: This is a sponsored post
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