If you start talking about unit trusts and share prices and you’ll see my eyes glaze over. But tell me that I’ll need to fork out close to R700 000 for EACH child starting Grade R in 2016 until they reach Grade 12, and you’ve got my attention.
That’s more than half a million rand, and it excludes tertiary education. The shocking reality of the situation is, that unless you’re on the Gupta’s payroll, you need to start saving for your kid’s education. Like yesterday.
If you’re looking for some guidance on where to start and how to go about doing this, read on for 10 tips for saving for your child’s education:
- Start now. Ideally, as soon as your baby is born. Its just five years until your little cherub will start school (and this excludes Grade 000 – 0)
- Do your research. Invest in the services of an independent financial advisor if you need someone to cut through the jargon.
- Don’t put all your eggs in one basket. Diversification is the most basic and effective manner to manage risk when investing.
- Make use of tax free savings accounts. You are allowed to invest up to R33 000 per year with a lifetime limit of R500 000. With this type on investment, there is no income tax, capital gains tax or dividends tax, meaning the longer you leave it, the more you will benefit.
- Save consistently. If you’re ill-disciplined (like me), make use of a debit order service that will automatically deduct your investment premium from your bank account on the day you get paid.
- Encourage family to get on the train. Grandparents, aunts, uncles, cousins…all have one thing in common: they love to spoil their little darlings. Ask them to contribute to the children’s education fund in lieu of Christmas or birthday gifts. After all, the gift of education is priceless.
- Review your budget regularly. Time passes, things change. Life is unexpected. An amount that seemed sufficient last year may be inappropriate this year.
- Monitor your investment performance. You should evaluate your investment performance regularly and adjust your portfolio accordingly.
- Invest in your own name. While the money will ultimately benefit your child, I don’t remember being mature enough to make life-changing money decisions at 18 years old. Why risk it?
- Involve the kids. Get the little ones a piggy bank. Open a simple savings account for the teenagers. Teach them the value of money and the concept of saving from an early age.