Educating your children can be very expensive due to the increasing costs of education in Australia. As well as school fees, other costs can include extracurricular activities, uniforms, schoolbags, stationery, books, musical instruments, transport and technology costs (such as computers and internet access).
Many of our clients want to ensure they have sufficient funds available to provide for their children’s education in private schools and universities. Nevertheless when they see the cost of school and university fees it is sometimes unaffordable. It is important to know the costs and how much you will need. A university education is often the third biggest goal for a family behind buying a house and securing their retirement. Frequently parents try to set money aside for this major goal soon after the child is born.
It is always advisable for clients to set up an education account earlier rather than later. Lesser fund contributions are needed the earlier a savings plan is started. This also minimizes the risk clients have to take to grow the funds. Just to give you an example, if a family started saving $500 per month for a period of 10 years and earned a 6% tax-free return, they would accumulate almost $83,000 in earnings.
Make a budget and decide on how much you can put aside each week or month and increase this each year to account for inflation. You could set up a direct debit from your bank account, make lump sum contributions or even contribute at the end of the financial year when doing your annual tax returns.
There are a wide range of portfolio options for investors to choose from. They are easy to manage and are very flexible when it comes to contributing and withdrawing.