“ If a man empties his purse into his head, no man can take it away from him. An investment in knowledge always pays the best interest “
It is well-established that an investment in a good education is one of the most important foundations that a parent can provide for their child. We believe education can open up opportunities and help any ambition become a reality. Accordingly, planning is paramount.
Planning to fund your child's education is often an endeavour that is under budgeted, and when real costs are factored in, becomes significantly more expensive than anticipated. This is not only due to the rising costs of fees over time, but the associated costs such as travel, living and required equipment (textbooks, laptop etc.).
These costs of course increase depending on whether your child is going to be educated domestically or seek education abroad. Many students aspire to an education in the United States, which is indeed regarded as offering the highest quality education in the world. However, a quality tertiary education in the U.S averages at $56,000 USD a year alone (without associated costs).
Melbourne Capital Group’s 7 Pointers for Education Planning:
- Plan Early: Carefully mapping out your savings horizon is crucial. Practically, work out how many years you have until your child reaches the age where your costs commence. Once the timeframe is established, planning and then implementing the necessary steps towards the end goal is far easier.
- Approximate the Cost: Trying to calculate the real cost of education can be difficult, but is a necessary step. Most fees and costs can be found with some preliminary research. Then the total fees and associated costs should also be adjusted for inflation over the timeframe - use a base rate of 2% per annum.
- Secure your Savings: Once you know the total cost, you will be able to work backwards to the present and determine the amount required to be saved on a periodic basis (weekly, monthly, annually). This provides a benchmark to follow to ensure your progress can be tracked against your savings target.
- Turn Savings into Investments: A proven strategy to combat inflation and rising costs is to ensure the yield on your savings pool exceeds them. Making strategic investments can assist in attaining your savings goal.
- Assure you’re Insured: Unexpected events do happen and it is necessary to have a back up plan in place. Ensure you have the correct level of insurance coverage to ensure that your financial goals and savings can be met in the event of the unexpected.
- Currency Control: Currency fluctuations can be very stark, and if these are not planned for in advance, they can present a massive problem. If the currency in which you saved has quickly devalued by the time tuition fees are due, it can prove a costly mistake. Make sure you know what currency your expenses will be due in, and where necessary, employ a strategy to diversify or hedge your currency risk.
- Get in Early: Research and register for your preferred school or education institution early. There are only a limited number of spots and securing one can be competitive. Planning well in advance can avoid disappointment from missing out.
Our team of Private Wealth Managers are experts in navigating the journey of education planning and helping our Clients meet all their financial objectives. Get in contact today to see how we can assist you in securing your future ambitions.