Late-starters guide to saving for your child’s education

Wilfred Moyo from Metropolitan.

Life happens. Before you know it, your child is six years old and ready to start Grade R…and you realise you haven’t put a cent away for their education.

“We sometimes find it difficult to prioritise education savings because of urgent financial commitments. Very often paying off a mortgage bond, utility bills, medical and grocery expenses take priority,” says Wilfred Moyo from Metropolitan.

Many people make the mistake of underestimating the expensive and long-term commitment in providing a quality education for your child. Primary and tertiary education can cost in excess of R1 million for tuition fees only. Parents are still expected to pay for text books, stationary, uniforms and travelling expenses, which can add up to a substantial amount.

“Ideally, you should start saving for your child’s education when you are still in the planning stages of having a child. By starting this early, you can benefit from the compound interest on your savings over time,” says Wilfred. “However, sometimes a Plan B is necessary if we find ourselves in a position where we are only able to start saving for our child’s education later than we would have liked.”

A short-term (five years or less) savings vehicle could be the answer, such as fixed bank deposits. “These offer a slightly higher return than a normal bank account. However, the return you get may be eroded by education inflation,” cautions Wilfred.

For a savings period of five years or longer, you can consider unit trusts, Exchange Traded Funds (ETF), savings products from insurance companies or direct investments (investing directly in the stock market).

“It is natural for every parent to want their kids to have it all; to live a good life without financial burden and to be able to land their dream career,” says Wilfred. “A good education is the only way to ensure that your kids have a chance to achieve this.

“It’s never too late to start to start saving for your child’s education – better late than never,” says Wilfred. “A financial adviser can do a free, no obligation and confidential financial needs analysis to help you identify and prioritise, as well as recommend solutions to fit your pocket. With an adviser’s guidance you can make an informed decision before choosing a savings plan that will help you finance your child’s education.”