You thought babies were expensive? Predictions show the cost of private education could be as high as a family home…
For most people, when starting to plan for a family, we usually consider the cost of babies and child care.
Cast your mind forward to when that baby is at primary and secondary school. Do you know how much he or she will cost to educate?
The cost of education has soared 61% in the past decade and is growing faster than average wages at 34%.
In fact, for a child born in 2018, the estimated cost for primary and secondary education is estimated at $66,320 in the public system and $475,342 for the private system per child.
If you have three children, the cost of educating them in our capital cities’ private education could top $1.6M – the same cost of some family homes!
Even conservative estimates from the Australian Institute of Family Studies show a couple with two children can expect to spend over $40,000 for 13 years of education .
Regardless of where you live and if you use public, faith-based or private education, school fees continue to be a major expense.
Many parents fail to appreciate the many additional expenses associated with funding a child’s education.
• Extracurricular activities
• School excursions
• Uniforms • Camps
• Technology (bring your own computer). iPads are required at some primary schools as young as year 3 and laptops at high school!
• School fundraising
• Travel expenses
Over the years, having worked with many clients who have children and have had to adjust to additional costs, we have at times observed the following:
• Mortgage payments reduce
• Personal debts and/or credit cards build up
• Refinancing options are limited due to lower servicing levels
• Investment plans placed on hold
Investments are typically the first item we see families put on hold while their children are young.
How can we change this?
Hidden savings from life after day care
For many, ‘big school’ also means no more childcare fees.
The usual average weekly cost of formal care for 16 hours per week in 2017 was $110.50 per week after subsidies. If your child is one of the almost 50%4 who attend care this could mean significant extra cash to redirect into contributing to education expenses.
The start of school is also an opportunity for a lot of parents to increase their hours of work or return to the workforce on a part or full time basis. This can also have a substantial effect on family income and lifestyle.
How do you best use these hidden savings?
Our other observations are that these hidden savings are typically absorbed into everyday living. We forget that we have actually been managing ‘without’ for a while. When we stop paying day care fees, our retail shopping goes up, or that holiday is booked and/or we buy that new car we’ve been waiting for.
These hidden savings can contribute to many things that will help you with your plight for affording your children’s 13 years of education:
• Paying off credit cards and other debt
• Paying down your mortgage (leaving you with more equity to invest)
Depending on your individual circumstances, we may be able to assist you to structure your finances and savings accounts to not only fulfil your home buying and investing goals, but ALSO help cover your children’s future education costs.
And let’s not start talking about university…
If your children’s future education costs concern you, why not call us for a chat?
You may be surprised how, by redirecting some hidden savings, we might actually get you on track with your family’s education costs and investment dreams.