As every parent knows, a quality education is one of the most important foundations you can provide for your child. But the costs of schooling can really add up over the years – and it’s not just fees; there are plenty of other extras you’ll need to cover as well. And of course, if you have more than one child, then all the expenses will be multiplied.
So how much can you expect to shell out for each child’s education – and are there ways to plan ahead so you can reduce the strain on your household finances?
What to expect
The cost of a child’s schooling in Australia varies widely between metropolitan and regional areas, and depends on whether you opt for a private or public education. But even if you send your child to a government school, there are still plenty of expenses that you’ll need to be ready for – like uniforms, books, supplies and after-school activities.
In a major capital like Melbourne or Sydney, the cost to educate a child born in 2018 from preschool to Year 12 could cost anywhere from around $72,000 to almost $550,000.i That means a family with two children attending private school could end up spending well above $1 million for their kids’ primary and secondary education.
And while cites like Adelaide and Perth are substantially cheaper, the projected costs still range from around $55,000 up to more than $400,000.i
How to prepare
As with any investment, you should plan carefully for your child’s education. Everyone’s circumstances and choices are different, so take the time to research and calculate how much you’re likely to pay over the course of your child’s school years. That way you can start budgeting as soon as possible.
If you’re lucky, you might have parents who are willing to chip in for their grandchildren’s education – but if not, don’t worry. Here are three things you can do now to help cover your family’s education costs without sacrificing your lifestyle.
1. Create a savings plan
By putting aside a little bit of money on a regular basis, you can grow your savings so you’ll have money to put towards your child’s schooling. A simple way to do this is to set up an automatic transfer from your paycheque into an everyday cash savings account. Once you get started, you will notice the interest compounding over time. As you get into the habit of saving, you’ll find it becomes easier to manage your short term expenses like school fees and uniforms.
2. Invest your savings
While a savings plan is great, it’s important to know that education costs may rise faster than inflation. This means your cash savings might not grow enough over time to meet your child’s future education costs, and you might want to consider non-cash investments as well. By investing part of your savings in an investment bond or managed fund, you may find it easier to cover education costs over the longer term, based on the anticipated growth and earnings from these investments. So it’s worth speaking to us about the best investment vehicle for your situation.
3. Pay down your mortgage
It can be tough keeping up with school fees and other costs when you still have a major financial burden hanging over you. That’s why it’s a good idea to start paying off as much of your home loan as possible before you child starts school, so you’re in a better financial position to manage their ongoing education costs when the time comes. Even if your child is already in school, it’s never too late for your financial adviser to help you get your finances on track and plan for the remainder of their education.