We all want the best education for our children. But some of us find that coping with mortgage repayments, living expenses and the cost of textbooks, uniforms and school camps in the future overwhelming.
With a little planning, however, you can reduce the impact of rising education costs and still afford to give your children the education you want them to have.
Here's how to start saving for your child's future without breaking the bank today.
Every little bit helps
It’s never too early to start saving for your child’s education. After all, it’s not just tuition fees that need paying – it’s also costs for uniforms, school trips and a whole lot of other extracurricular activities. By getting a head start, you’ll be much better prepared to deal with whatever expenses come your way. Even if you have little to spare from your paycheque, putting aside a small amount every week will soon add up.
The Australian Securities & Investments Commission’s (ASIC) Money Smart website also has some useful information in relation to savings and investment options available to help you.They include savings accounts that earn higher interest if you make deposits regularly, a term deposit or an Education Fund. These options vary considerably so it’s also important to read the fine print and make sure the strategy fits your needs. You could also consider speaking to a qualified financial advisor to determine which option suits your personal objectives, financial situation and needs.
Pay off your mortgage
If you have a mortgage, it is probably the biggest single expense in your family budget, so the sooner you're able to pay it off, the more you’ll save on interest payments. The freed up cash can go towards your children’s education. To give you flexibility, you might want to consider a mortgage with an offset sub-accounts or redraw facility.
An offset sub-account is like a savings or everyday account that’s linked to your mortgage. The amount in the offset sub- account may reduce the interest you pay on your mortgage each month, while giving you the flexibility to access those savings when you need them. Alternatively, a redraw facility allows you to draw on extra funds in your mortgage. Some accounts may charge a fee for a redraw or offset facility, so look for ones that have low fees or, better still, none at all.
Consider a Personal Loan if you need to cover shortfalls
It’s not always possible to plan for every eventuality. If your child wants to go on an exchange program or you need to cover an extra semester at school, you can also consider applying for a personal loan to help you cover the shortfall. But don’t forget that while a personal loan can help you cover the unexpected, it’s way better to have a long-term savings plan in place for your child’s education.
Got a question? Call us on 1300 108 794. We're here to help.
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