Climbing the mountain called Educational costs
Our children come into our lives fully assured that we, their parents or guardians, are in complete control of all aspects of life. They trust that we know what’s best and can see miles into the future. In short, we are their super heroes.
We never want to let them down, and yet, according to the Old Mutual Savings and Investment Monitor 2017, 56% of South Africans are not saving for their children’s education. The biggest influential factor in a child’s life.
Discovery Life recently published key insights on current trends in education funding and protection in South Africa.
From pre-school to finishing a first degree, the average family with two children will spend around R5 million (R2.5 million per child) on education in today’s terms, said Gareth Friedlander, head of R&D at Discovery Life.
That means you have to save around R6 700 each month per child while Education inflation historically runs at about 3% per year above the inflation (CPI) figure, so the cost of education is generally increasing at a more rapid pace than our salaries.
“The fact that children are starting school earlier than before and the many extra costs associated with education, such as laptops and other technology, extra tuition, sports and other activities, can shoot up the yearly costs by approximately 50%”, said Gareth Friedlander.
It’s not all doom and gloom though. Research shows that for each additional year of education a person’s income increases by 10%, higher education lowers people’s mortality risk by up to 22%, and each additional year of education on average boosts a country’s GDP by a vast 18%.
There are 2 ways to lay your mind to rest when it comes to your child’s educational funding.
The first is to put in place a risk product that can fully protect their children’s education starting at crèche level if something was to happen to you or your spouse. It should make provision for tuition and tertiary residence fees and provide an annual lump sum to cover books, uniforms and the like for holistic cover. It should also provide the option for international education.
Lastly it should provide you with the opportunity to have your children’s tertiary education fees be paid even if you don’t claim. Discovery’s Global Education Protector covers all these aspects and more.
Second option is to start your savings plan. Saving money is like planting a tree. The best time to start is now. With factors such as compound interest, sound investing strategies and educated advice, reaching your savings goal might just be a bit easier than expected. No matter how small the amount, it will greatly out pace doing nothing.
Get in contact with your financial advisor today or start your own planning to ensure you put your children’s future first because Joe Biden said it best when he said: “Don’t tell me what you value, show me your budget, and I’ll tell you what you value.”
To learn more contact Jason Jordaan on email@example.com
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