When to start saving for your child’s education


The bigger shock came when we spoke to the ambulance driver – also a mum of 3 – about how much our local independent secondary schools cost per year. After hearing the figures (between $8,000 and $22,000 per child per year), I was the one needing a ventilator. And we live in a regional area, so fees for metropolitan schools are even higher still.

It turns out my estimates, based on a spreadsheet I whipped up when no.3 pregnancy was confirmed, were way off. We’re talking way, WAY off.

If you’re anything like us, you started thinking about schools around the same time your child grew out of their first Wondersuit. It’s one thing to think about education, and it’s another to start cementing a foundation for it. This trip to Emergency and its subsequent “what ifs” have suddenly brought this issue to the fore for us.

5 reasons why you should start saving early for school

1.  The earlier you start saving, the less your contributions.

Saving is simple (in principle): small change makes big change over time. As you incrementally add small amounts to the pot, your collection begins to grow. The amount you need to save will vary according to the school fee and the number of children you have.

That said, the actual figures are enough to land you in the Emergency department. According to this Sydney Morning Herald report (dated 25 January 2012), even if parents start saving when their child is born, they would need to save between $376 and $940 per month from birth to age 18. (Please visit the report for a full breakdown of figures).

[Do you need to lie down? It gets simpler …]

2.  Saving early, you can maximise your investment return.

This also gives you greater freedom to take risks with your investment, if you’re inclined to do so.

3.  Private school fees are rising faster than inflation.

Fees at most private schools rise between 5.5 and 7.5 per cent a year, whereas inflation sits at around 3%. The best way to stay near these moving goalposts is to start early and make regular contributions.

4.  More savings means greater choice between schools.

Putting money away for your child’s education early can broaden your available choices when it’s time to fill out enrolment forms. Starting earlier is likely to yield greater savings, which means greater choice in the type of school you can afford.

5.  A formal savings plan will make saving simpler.

An investment designed for the sole purpose of funding your child’s education is less likely to be absorbed by other household costs. It also lets your children know how much you value their education. It’s probably the greatest gift you can give them, aside from a loving, safe home.

It’s time to stop thinking about school fees, and start saving. What are you waiting for?