How can you make education costs more affordable?
A recent report* estimates the cost of raising 2 children from birth to when they leave is $812,000. Education is a large part of these expenses, particularly for higher income families who may send their children to private school. Aside from school fees, there are regular expenses such as uniforms, equipment, and excursions that can affect your budget significantly, and with tertiary education these costs might be around for more than 15 years!
What you need to know
Putting in place a regular savings or investment plan as soon as possible is the key to making sure you can afford to give your children the education they want. There are a range of options available including:
- Managed funds
- Investment bonds
- A trust
- Education funds
- Regular contributions are key to saving for your child's education. Work out your budget and how much you can afford to save each month
- Consider investing in your name rather than your child's name. In most cases, investing in the name of a child is inefficient for tax purposes, as penalty tax rates apply to 'unearned' income for people under 18.
An adviser can help you:
- Start saving for your children's future in a tax effective way
- Put in place a regular investment or savings plan
*"The cost of raising children in Australia", AMP. NATSEM May 2013.