As the start of the new school year is upon us, many of our clients have recently had school fees to pay. Those parents sending children away to university now face a whole new set of costs. We felt it would be a good time to address the issue of education and how the costs can be planned for.
All parents want the best start in life for their children. Of all the benefits you can provide, the one that has the most lasting value is a good higher education. Today’s world is increasingly competitive and securing a good career is increasingly difficult. It is therefore natural to want to provide your child with the best possible education to give them every chance to succeed.
University fees have however steadily increased over the years and the cost of good education is a major expense. This makes planning vital, so that adequate funds to meet these costs, especially if you have more than one child.
Planning in advance can mean financial freedom for yourself as well as, at the same time, providing an excellent start in life for your child.
Currently the cost of sending a non home based student away to university stands at around £30,000 per year to the UK and over $50,000 per year in the US. For many expatriates this cost would be very difficult to fund from annual salary, so unless it is planned for, it may involve returning to your home country, or the child missing out on the education which you and they aspire to. Due to the inflation associated with education this cost is increasing by around 7% per year so it is only going to become more important to plan in advance.
Through setting money aside on a regular basis for as many years as possible is the simplest way of preparing thus making sure that this money is working over time.
An investment in your children’s future is one of the most important that you will make and as with all investments it pays to start as soon as possible. It’s never too late to make a regular commitment to saving for a child’s education, but sacrificing today can make for a brighter future. Your pay-back is something you can enjoy over many years.
How do you start to plan?
Firstly it is important to look at the realistic cost of university education today in the location which your child may attend. Then consider:
- Annual Course Fees
- Costs of flights
- Cost of residence in university supplied halls
- Realistic living expenses
- Other education costs (books etc)
Once you have come up with an annual cost then multiply this by the average number of years of courses in that country and you have an overall cost. The part which is then overlooked is the effect of inflation on the cost of education in the years leading up.
To give you an idea the current cost in the UK:
- Per Annum: £30,000
In 15 years time this could cost:
- Education: £12,000 x 7% inflation = £33,000
- Other expenses: £18,000 x 3% average inflation = £28,000
So an average annual cost for a child in 15 years could be as much as £61,000 per annum, or £183,000 for a 3 year course / £244,000 for 4 years.
If you were to save this money in a bank account, returning interest below the rate of inflation, then it would leave you with a huge amount of saving to be done, (A 3 year course would mean you have to save £1,000 every month for the next 15 years to ensure that this money is in place.)
While interest rates remain so low saving would be an impossibility for most. This is why many people look for alternative options for putting this fund together and they could range from buying another property which could provide extra income, investing into a saving vehicle which would give you exposure to returns or looking at other ways of making your money work for you.
In order to understand this process better please contact your financial adviser, or we would be happy to offer you a no cost or obligation consultation so that you can be sure that you can offer your children the education they deserve.
Contact your local deVere office to learn more about this and other financial issues
For more information on the deVere Group, see our Inspire page here