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Determine your current financial situation
Identify and develop financial goals
Create a step-by-step plan to achieve them
Track your progress and make adjustments
How do you help your children make the most of the opportunities ahead?
Whether it is providing for their education by paying for school/university fees or putting money aside as a deposit for their first property; investing for your children is a priority for most parents, as they want to give their children the best possible start in life.
Focusing on education planning the most essential factor is when you will need the funds!
The salient point is that establishing an education pot via education planning is one of the most worthwhile actions which can be done for your children’s future. It can also be challenging if you don’t know where or how to start.
There are a variety of different ways to save for children, from simple savings accounts to complex trusts. What’s right for one person may not be right for another – so as you craft your education planning strategy, start with these steps:
1) Define your savings goals
Depending on what point you start to build education capital, the earlier you start investing the better, with tuition costs varying based on the school/university, type of study/degree and inflationary cost rises. We take an approach centred on understanding your goals and dedicated to helping you grasp clearly what it will take to get there.
2) Have a realistic expectation of the costs
Start by understanding how much you will likely need to send your child (or even grandchild) to the appropriate university. There can be a significant price difference between public and private higher education. Do the maths to estimate how much you need to put away every month or in a lump sum to meet that goal by the time funds are required.
Remember that, on average, tuition costs are increasing by 6% every year and this is an important factor.
3) Explore your funding options
You can build an education pot through a combination of savings, income, possible grants, contributions, borrowing and financial aid. Discuss with other family members (grandparents, aunts and uncles) if they will be willing to participate and in what way. Get to know the situation in your country and abroad as time goes by.
Everyone’s approach is different and we will be delighted to help you understand what would work best for you and your family.
4) Don’t just save, invest!
The right investment strategy can help your money grow faster so you can reach the education funding goals before Day X.
Have an investment strategy and stick to it even when you witness the volatility on the market.
Investing for the long term has proven to be one of the best strategies historically. So, if you have several years before the children will go to university, you don’t necessarily want to abandon equities altogether, as your biggest hurdle isn’t market volatility alone; it’s tuition inflation, which historically totals 6% a year. That’s why it’s important to consider investing rather than just saving.
It’s vital to understand what investments you hold within your educational accounts. We encourage families to know what the education pot consists of and be diversified with a mix of different assets within the investment portfolio.
5) Adjust your approach as you go
The strategy you develop today is just a starting point. We would help you track your progress and make adjustments as the market shifts or new priorities come your way.
When markets are in turmoil, it may feel like all the hard work you did to save for future education expenses is in jeopardy. You are not alone; most parents tend to feel emotional about education savings. It’s an investment that combines your own efforts to provide for your child’s education with your hopes that a degree will bring them a happy life.
While facing it, doesn’t feel good, you shouldn’t let that derail your plan. In fact, volatility offers you an opportunity to check on your educational portfolio. When you look at your statement, determine first if you need to do anything at all.
!!! Trying to time the market is extremely difficult to do, so you might be well-served not to touch the account.
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Frequently Asked Questions
How much do I need to save for my children’s education?
The longer you delay it, the more you will have to save each month to get to your target. We can cater to your plan based on the number of years and the amount you can afford. Please read our investment guide to make a more defined calculation.
What type of education account do I need?
You will need to have a plan which is globally portable in case you move countries. You may also need a plan where you can change currency. When building up the pot, you will want a flexible arrangement where you can add your yearly bonuses in, and also be able to top it up when need be.
Also, it will be vital to arrange the children’s access to this pot in case you will pass away and to make sure these funds will be used for the original purposes.
What is the best way of building education capital?
The fact is – there is no better way, as each family situation is unique.
However, regular contributions seem to be one of the easiest ways for education funding. The reason is – it allows you to take advantage of cost averaging plus you are benefiting from the compound growth over the years. This strategy will do its utmost only on a long-term basis.
Despite the uncertainties of the market and the economy, the reality is that university is not likely to get cheaper. You should not expect costs to come down in a meaningful way unless you are willing to make a significant change in how your child will be educated. For parents saving for university, the best thing you can do is to continue investing on an ongoing basis.
What happens if I will need money earlier?
You will have full access to use it for your children’s future. Depending on the type of plan you take, the existing strategy will vary. This is also dependent on where you are living and where your children will go to University. We aim to make it as tax efficient as possible.
What if my children decide not to go to university after all?
You can use this money for whatever you like. In some circumstances, the children have gone to a free University or received a tutorial scholarship and parents may decide that the money would be better spent on putting down a deposit for their children’s first house or buying their first car. If it’s not all used up, you could even put it towards your retirement as a little bonus.
Our First steps in Education funding guide is waiting for you at firstname.lastname@example.org
Education funding guide
Please leave your contact details to receive our Education funding guide.