In a post-Covid world, the idea of starting a family has challenges that previous generations did not have to account for. One of the biggest of these is the financial implications in an economic downturn, and the cost of education ranks high on the list.
However, education options have broadened as schools and even tertiary institutions have pivoted to embrace online learning, which allows for social distancing and, in some cases, individual tuition.
Cost of education
The average cost of a year at a public primary school is currently R21 200 or about R2 120 a month if you pay over 10 months. If you choose to send your child to a private school, it will set you back R61 900 for the year or R6 190 per month.
“This could be quite a significant portion of your monthly budget, if you don’t have any other financial provision to cover these costs, and excludes any additional expenses for uniforms, stationery, technology requirements (like an iPad and regular data), and extra tuition,” says Karabo Ramookho, Strategic Retail Marketing Manager at Old Mutual.
“If your child started Grade 8 this year or will start Grade 8 next year, prepare to cover the costs of R183 900 for their five years of public high school. If you choose private high schooling, the costs soar to about R533 000 over the five-year period. In addition to this, you’ll need to fork out R230 600 for a three-year undergraduate degree or tertiary diploma,” says Ramookho.
She adds that if your son or daughter wants to specialise with an Honours, Masters or Doctorate degree in the STEM field of their choice, you will need to add the costs of several more years of studying.
Creating your education savings plan
While all parents share the common goal of saving for their child’s education, your individual savings plan will differ based on your financial circumstances and your personal budget. There are pro-active steps you can take as a parent with a single income. One of the first things you can do is to empower yourself with information so that you can identify the right savings strategy for your needs,” Ramookho says.
If you don’t already have a budget, you can use this calculator to draw one up. 22seven is a budgeting app, brought to you by Old Mutual, that helps you track your expenses and set up investments. The app can show you how much you are spending and what you are spending money on. It can also help you save by identifying expenses that you could consider cutting. The app also has a goal-setting functionality to help you stay on track.
Providing for the worst-case scenario
In a pandemic environment filled with uncertainty, it is prudent to take advantage of offers such as Old Mutual’s Premium Protection. Premium protection cover ensures that your insurance premiums are maintained if you are unable to keep up payments due to a prolonged illness, an accident, disability or even retrenchment. If you did not sign up for premium protection cover at the time of taking out your policy, you can add on this benefit at any time.
Premium protection is also affordable. For example, on an investment plan of R1 000 a month, your premium protection benefit would cost you just R85 a month. A small price to pay for the peace of mind that comes with the knowledge that your child’s education will be covered, no matter what.
“With just a few tweaks in your financial behaviour, saving can quickly become second nature and those cents start adding up quite quickly,” Ramookho says. She outlined the following savings tips:
- Make your hobby your side-hustle: A recent report by the Henley Business School shows that as many as 27% of working South Africans have side hustles. You could tutor, offer to babysit, start a school lift club, make jewellery, or even offer to do odd jobs around the house if you are handy with tools.
- Set up a debit order: Pay yourself first. Build in your savings as a debit order rather than waiting to see what is left before you start saving. Too often, you will find a reason to spend that money rather than save it. A debit order removes that temptation and helps you to live within your means.
- Revise your savings plan regularly: Regardless of whether you have an annual increase built into your savings plan or not, you should regularly revisit the amount you are saving. If you are lucky enough to receive a salary increase or a bonus, consider channelling those funds into your savings rather than upgrading your lifestyle to a more expensive cost of living.
An accredited financial adviser can look at your specific situation and help you find the best financial solutions.
Visit https://bit.ly/2VXbKKm to get in touch with an accredited financial adviser.