Let’s talk $
Australian parents spend, on average, a total of $50,000 on their child’s education and childcare according to a report by The National Centre for Social and Economic Modelling.
Even public education isn’t free. If you have a child at a government school, you’ll be familiar with voluntary contributions, the cost of uniforms, excursions, home computers and internet costs, not to mention forking out for musical instruments and sports uniforms if they happen to join the school band or soccer club!
Australian Scholarships Group, a not-for-profit provider of education savings plans, estimates the total cost of putting a child through a government primary and secondary school to be up to $65,829. This includes tuition fees and levies (including fundraising contributions), uniforms, school bags, music and sporting materials, computer costs as well as incidentals like private tuition, camps and extra curricular activities. If you have three or more kids, you’re looking at the cost of a small house just to educate them!
If you choose a private education, ASG estimates the figure to be up to $428,723 per child.
Why so much?
Education costs are on the rise. The cost of education has almost doubled the rate of inflation over the last 20 years. According to 2009 figures from the Australian Bureau of Statistics, education costs rose at 5.6 percent compared to the overall inflation rate of 1.3 percent.
Why? There are a number of reasons for the rise. Teacher salaries have increased, but other factors include technology (hands up who has a home computer?), infrastructure, maintenance and smaller class sizes.
The good – and the bad – news about the Schoolkids Bonus
On 1 January 2013, the Gillard government introduced the new Schoolkids Bonus to replace the old Education Tax Refund (ETR). Eligible families received $410 a year for each child in primary school and $820 a year for each child in secondary school. However, the Abbott government intend to abolished this bonus. It will continue until the end of 2016, which will allow families time to adjust to the change. The last instalment will be paid in July 2016. An income test will also apply to the Schoolkids Bonus starting on 1 January 2015.
Saving for education
Whether your future nurse, baker or nuclear physicist is only a few months old, toilet training, or about to start secondary school, it’s never too late to start saving for their education. Obviously, the sooner you start the bigger the nest egg, but better late than never.
Apart from traditional savings accounts and more complex investments like shares and bonds, there are specific education funds set up to help you put money aside for your child’s education. These are called scholarship funds and are offered by the below friendly societies:
Cut out the small stuff
If you’re wondering how you’ll come up with the extra funds needed for an education savings plan, consider cutting out these everyday expenses and you could save over $5,000 a year!
1. Take your lunch to work instead of buying it – $2,000
2. Ride the bus to work instead of driving – $1,500
3. Turn your electrical appliances off at the wall -$110
4. Use the clothesline instead of the dryer – $40
5. Stop buying one monthly magazine – $250
6. Stop buying take-away coffee on your way to work- $750
7. Unplug the 20-year old fridge you keep in the garage – $445
8. Replace one take-away meal each week with home cooking – $400
Source: MyBudget