The ris­ing cost of education

It’s im­por­tant to start sav­ing as soon as pos­si­ble to put your child through school and univer­sity

CityPress - - Business -

Arecent study by San­lam, fo­cus­ing on moth­ers with chil­dren aged be­tween three and 15, shows that some par­ents will even at­tempt to hold down two jobs to keep their chil­dren en­rolled in a pri­vate school, which they per­ceive to be the best legacy they can give their chil­dren.

Karin Muller, the head of Growth Mar­ket So­lu­tions at San­lam, says: “Our study shows that hav­ing the best pos­si­ble education is the big­gest dream that most moth­ers have for their chil­dren, re­gard­less of their age or in­come.

“At the same time, one in four par­ents are not sav­ing any­thing to­wards their child’s education, which means that th­ese dreams may not be re­alised in fu­ture be­cause the costs keep ris­ing.”

Muller says that for those par­ents who are sav­ing, the sur­vey found that most moth­ers say they in­vest be­tween R200 and R500 a month for each of th­ese needs: fu­ture school­ing, ex­tra­mu­ral ac­tiv­i­ties and/or their child’s nest egg.

The sur­vey also found that older moth­ers gen­er­ally in­vest more in their chil­dren’s education than younger moth­ers. This is pos­si­bly be­cause older moth­ers have a higher in­come.

While the ma­jor­ity of moth­ers are op­ti­mistic about their chil­dren’s fi­nan­cial fu­ture, the middle-in­come group is less con­fi­dent than the emerg­ing and up­per­in­come groups, which high­lights the fi­nan­cial pres­sure felt by the middle class, which re­ceives no fi­nan­cial sub­si­dies from govern­ment, but which is af­fected by ris­ing liv­ing costs and in­creas­ing taxes.

While education is a pri­or­ity for par­ents, fig­ures re­leased by Old Mu­tual il­lus­trate the fi­nan­cial com­mit­ment that is needed to ed­u­cate our chil­dren as education costs con­tinue to rise well above the level of in­fla­tion.

Ac­cord­ing to Jean Min­naar, in­vest­ment and sav­ings man­ager at Old Mu­tual Emerg­ing Mar­kets, in 2016, one year’s education could Ex­pected cost of a year’s education R29 000 R71 000 R114 000 R50 000 R45 000 R109 000 R176 000 R77 000 R90 000 R217 000 R351 000 R154 000 R139 000 R334 000 R540 000 R237 000 cost be­tween R29 000 and R114 000, de­pend­ing on the level (pri­mary school, high school, univer­sity) and type (pri­vate, pub­lic) of education.

By 2021, it is fore­cast that par­ents will be spend­ing be­tween R45 000 and R176 000 for one year’s education ( see ta­ble).

If your child is start­ing Grade R this year, the com­bined cost of education is ex­pected to be R1 057 000 for pub­lic schools and R2 406 000 for pri­vate.

This in­cludes pri­mary school, high school and a three-year univer­sity qual­i­fi­ca­tion.

For ex­am­ple, if your child is born in 2016, look­ing at the fig­ures in the ta­ble and as­sum­ing a 10% in­vest­ment growth be­fore fees, you need to save about R530 a month for univer­sity tu­ition (ex­clud­ing ac­com­mo­da­tion, books and trav­el­ling costs).

How­ever, if your child is al­ready 10 years old, you will need to be sav­ing R1 050 a month. This high­lights the ben­e­fit of start­ing early.

Re­mem­ber, th­ese monthly sav­ings will also need to be in­creased by 9% a year to keep up with in­fla­tion re­lated to higher education.

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