Education isn’t cheap
Key to securing your child’s future is to start saving
KICK start 2014 smartly: start saving for your child’s future — a good education can cost hundreds of thousands of rands!
At the start of every year, we feel the strings on our purses being pulled. Luxuries must be cut to keep up with the rising cost of rent, food, electricity and transport; not to mention the long list of children’s education expenses.
And with education inflation surpassing general inflation, the future won’t get easier. The longterm solution? Start saving today for your children’s education.
“We all want the best for our children and this means getting them a good education to ensure they fulfil a greater purpose in their lives,” said Sinenhlanhla Nzama, an investments marketing actuary at Old Mutual.
The Old Mutual Savings and Investment Monitor shows that 54% of South African parents do not know what the future cost of education will be, and only 40% are saving for their children’s education.
“This is alarming when you consider that a good education can end up costing hundreds of thousands of rands,” said Nzama.
“Our stats show that people are tightening their belts and education is one of the main areas where budgets are cut,” said Nzama. So what costs are we looking at? In 2014, a year’s education for one child could cost between R23 000 and R42 000, depending on the level (primary school, high school, university) and type (private, public) of education.
A 2033 forecast will see you spending between R118 600 and R215 500 for one year’s education.
If your child is starting Grade R this year, the combined cost of education is expected to be R950 800 for public schools and R2 207 000 for private. This includes primary school, high school and a threeyear university qualification. The figures on the cost of education are based on selected exmodel C government and private schools and universities. The projected annual school fees are increased at a flat rate of nine percent annually. IMAGE: GRAPHICS24
Do not panic — empower yourself with information and a plan.
“Whether you are new parents, a single parent or an established family, the key is to start saving early,” said Nzama.
“The later you start saving, the more you will need to save per month.”
For example, looking at the figures in the table and assuming a 10% investment growth before fees, you need to save about R460 a month for university tuition (excluding accommodation, books and travelling costs) if your child is born in 2014.
However, this is about R870 if your child is already 10 years old!
These monthly savings will also need to be increased by nine percent with each year going forward, to keep up with education inflation.