Plan the start of someone great

Iain Williamson, Managing Director of Old Mutual?s Retail Affluent division

With finding employment being one of the biggest challenges young people face today, planning their education is definitely the wise way to honour Youth Day in 2012. It’s estimated that the majority of matriculants who look for work straight after complet

To help parents find out how much they should save and how they can save, Old Mutual has developed a newly available array of online calculators.

“The earlier you start saving for education the better, and the more likely you are to have a life free of regrets and financial shocks,” explains Iain Williamson, a father of triplets and Managing Director of Old Mutual’s Retail Affluent division. “As parents we can empower ourselves and our children by planning ahead properly, using the online planning tools now on the Old Mutual website.”

Without realistic planning, he says, the cost of quality education can come as a nasty surprise, especially in tandem with the rising cost of living. “It’s a real tragedy when a parent cannot help a bright child to realise their potential. With foresight and some thorough preparation you can open so many more doors of opportunities for your child.”

Williamson warns against using your current income and the current cost of, say, a degree such as a Bachelor of Arts (BA) to estimate how much you might need to pay when your child matriculates.

Merely factoring in “inflation-adjusted” earnings won’t be accurate because of the hefty escalating cost of tertiary education. Three years at university will cost around R176500, but if your child started school this year, that three-year degree could cost R496500 by the time they’re old enough to go into tertiary study in 2024.

The cost of higher education must also be seen in the context of other living costs: a recent Finweek survey compared today’s prices for a variety of goods and services with those of a decade ago and found that high school fees had risen from around R4 800 in 2002 to R14 000 in 2012. Williamson notes that few South Africans’ earning capacity would have risen to keep pace with that.

Bear in mind too that becoming a medical doctor, an actuary, an engineer or an accountant costs more than a BA degree. The faculties that produce graduates who are in great demand in the market place tend to be more expensive.

With only 900 or so actuaries and a grossly insufficient chartered accountant population of 33 000, it’s clear why these graduates can earn more. South Africa’s shortage of engineers has been described as one of the worst capacity and scarce skills crises in years, with as few as 473 engineers per million citizens compared with Japan’s 3 306, Chile’s 1 460 and Malaysia’s 1843.

But rather than being panicked into inaction, the key is to empower yourself with information and to plan: do your calculations and act early, he says. “We South Africans have much for which we should be grateful. And one of the foremost is that the vast majority of us are passionate about educating our children. For the sake of both our children and our country, we now need to make sure that we convert that passion into action.”

See www.oldmutual.co.za/smartmax for online tools.