With the start of 2017 looming, many parents may have started to consider the cost of their children’s school and tuition fees for the next school year. While families have a number of financial commitments to attend to every month, this is the time of year where school funds are often moved to the top priority to ensure that the family is financially prepared for the expenses that accompany a new school year.
This is according to Nico Coetzee, Executive: PPS Financial Planning, who says that saving for a child’s education requires careful consideration and proper planning.
He provides some tips below for parents to ensure that they have planned appropriately for their children’s education costs:
Parents should start saving for their children’s education as soon as they possibly can. Many people do not consider, or are not aware of, the great advantages of compound interest, and how accumulated savings grow over several years when invested properly. By investing from an early age, parents will eliminate the financial worry of not having sufficient funds to give their children the best education possible, as the funds in their investment will grow every year.
The best way for parents to ensure they are regularly contributing towards their children’s education is to open a dedicated savings account and set up a monthly debit order. This way the parents will automatically save money every month towards this cause. However, they must have a strict rule in place to never withdraw any money from this account if it is not related to the child’s education.
Explore ways to get discounts
It is advisable to do some research and contact schools to find out whether they offer financial incentives that could result in long-term savings. Many schools offer a discount if the fees are paid as a once-off amount in advance. Some also offer a reduction when there is more than one child attending the school. These types of savings can make a big difference over an 18 year period.
Include education funding in the financial plan
It is important that parents include education funding in their overall financial plan. These expenses have to be accounted for as part of the monthly household expenses to determine how it will affect the family’s overall financial position. When it comes to developing financial plans, it is usually a good idea to consult a reputable financial planner who will be able to develop a solution for the client to ensure that they have provided sufficiently for their children’s tuition fees and related education expenses.
Coetzee states that PPS recently launched an education cover policy which will pay the tuition fees of the policyholder’s child in the event of the policyholder’s death, disability or severe Illness. “The new product is called PPS Education CoverTM and is available to all qualifying, new and existing PPS members. The benefit will pay the actual school and/or tertiary fees directly to the education institution of the policyholder’s child up to the maximum amounts as stipulated by PPS in the policy. It also provides an allowance for basic tuition essentials such as textbooks, stationery and residential fees at tertiary level.”
“With the cost of education increasing every year, parents are faced with increased expenses for the privilege of sending their children to school. School fees are a big financial commitment, but with the right advice, families do not have to see this expense as a financial burden,” Coetzee concludes.