Saving money for education

By You and Money

You’ll face many expenses when your child is growing up, but education is likely to be one of the biggest. Here are a few tips to help you save for your child’s education.

  • Work out a budget: Will you be sending your child to a private or public school? Make sure you research the school’s website or course handbook carefully so that you fully understand all the costs involved. Private schools vary greatly in the fees that they charge.
  • Factor in other expenses: It’s also important to add in other expenses such as stationery, uniforms, computers, sporting equipment, excursions and camps.
  • Use a savings and budget planner: Develop a savings plan that covers all possible expenses, making sure that you allow for inflation and price rises.
  • Start saving early: Set up an account for your child that’s only for education. There are lots of savings accounts on the market that offer bonus interest if you make a deposit and no withdrawals each month.

Saving and payment options

There are different ways that you can save for your children’s education, including term deposits, managed funds and shares.

Your child may be eligible for HELP during their studies. This is a government loan for tertiary students that defers payment of university fees. You’ll still need to cover costs for things like books, materials and transport. For more information about university fees, visit www.goingtouni.gov.au/.

Many financial institutions also offer student loans. A student loan is a personal loan designed to assist tertiary students with their financial needs. The loan terms vary but are usually between 12 months and seven years, depending on the financial institution. Interest rates and loan conditions can also vary between different credit providers, so it’s definitely worth comparing loans.

A qualified financial adviser can help you identify your goals and develop a clear financial plan. For more information about the ins and outs of financial advice, visit www.moneysmart.gov.au/investing/financial-advice

Share your experiences

Have you recently become a parent? Let us know about what worked for you financially – we’d love to hear from you.

One Response to Saving money for education

  1. Katherine Lawford says:

    I find the easiest way to save money for any major expense is to make it automatic. The best way to do this is to set up different bank accounts as required and then automatically transfer from your main account to other accounts a set amount you can afford each week. For instance you may wish to have a joint account for living expenses, but a direct debit established to transfer out of this account a certain amount for savings. This can usually be done to the same bank or a different one. Certain banks have accounts that let you effectively do fee free banking so transfers shouldn’t cost you a cent. Over time you will not miss the money being transferred out, but will be pleased to see your savings quickly grow.

    An even better way is to set up the direct debit through your employer. You can arrange to have living expenses money go into for instance a joint account, another amount go into a savings account, and even any leftover go to an entertainment or personal use account. This will completely avoid any bank fees and let your money work for you without requiring any effort. Some banks offer a high interest account for your savings. If you can link your savings to one of these accounts, then you can earn a decent amount of interest and simply transfer it back to your original account when needed. It’s free money that’s up for the taking.

    An equivalent and advisable investment route is to put some extra money into your mortgage with a redraw facility if you have one. This effectively reduces the amount of mortgage interest you will pay and give your savings the equivalent interest rate of your mortgage. Ultimately whichever option you choose, make sure to monitor your spending, but ensure to have a little fun every now and then.

Leave a Reply

Your email address will not be published. Required fields are marked *


*

* Copy This Password *

* Type Or Paste Password Here *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>