Providing your children with the education they need to build a successful future is something most parents strive for. But with the cost of education increasing annually at a higher rate than inflation, and average salaries barely keeping pace, putting your kids through school needs to be part of a considered financial plan.
According to Statistics SA almost two in every ten potential learners are unable to attend school or a tertiary institution due to a lack of funds.
This is extremely worrying and suggests that many parents are not planning sufficiently and also not aware that help is out there. The fact is you don’t have to shoulder the burden of financing your child’s education alone.
Only 35% of metropolitan working South Africans prioritise saving for their child’s schooling, according to the 2017 Old Mutual Savings & Investment Monitor.
While the national government announced that students from working-class homes would qualify for free higher education from this year, offering some relief, fees are only one part of the equation and parents should continue to factor in the additional expenses related to education.
This is because many South Africans are too overwhelmed by trying simply to make ends meet and satisfy the most basic of needs such as food, shelter and clothing. This is where great financial advice and holistic financial planning could make all the difference. The value of financial advice lies in its ability to help stretch and grow whatever money you have, whether it’s a lot or a little. Too many South Africans have the misconception that financial advice is a luxury that’s only reserved for the wealthy.
A good financial advisor will work with you to help you create a financial plan that suits your life. They will have a detailed discussion with you to understand your personal situation and your unique needs and goals before suggesting solutions such as an appropriate education plan.
Working with a financial advisor to save effectively for your child’s education means you don’t need to grapple with this daunting responsibility on your own. It also means you will devise a strategy that is sustainable and do-able without financially burdening your children or community down the line.
Tapping into precious retirement savings or taking on expensive debt to enable your child to go to a good school or university may seem like feasible solutions, but they could have uncomfortable long-term consequences. For example, you may have to depend on your children or community at a later stage to service the debt you took on or to help fund your retirement.
Starting to plan as early as possible is the best gift you can give to your children. A solid financial plan will give you a blueprint to stick to and will ensure you don’t have to make complex decisions about savings vehicles and investment strategies alone.
Marius Pretorius is head of marketing: Retail Savings and Income Solutions at Old Mutual.