For a child born today, an average public school education is expected to cost you around R530 000 in school fees alone from grade R to 12, and a private school R1.8 million.  This excludes extra murals, books and stationery. To make matters more challenging is the fact that education fees increase on average by 9% a year, which is a lot higher than normal inflation rate. These fees will probably increase above any rate of salary increases that you may receive.

To send the same child to university to do a three-year degree in 18 years’ time would cost about R420 000 in fees alone. That excludes the cost of books, travelling, accommodation and pocket money. These expenses may be tough on your monthly budget – start saving from today.

To grow your wealth, it is important that you increase your savings every year by more than the inflation rate. If you start saving from the day your child is born, your initial premiums will be lower than if you start later. They will be lower still if you opt to increase the premium with education inflation every year. However, it is never too late to start. 

‘It’s never too early to start planning for your children’s education, especially since their future may depend on the financial decisions you, as parents, make today,’ says Karen Thomas, Marketing Executive at Old Mutual

Most children are ready to start Grade R at the age of six. If your child is born today, you will be required to save about R4 400 per month to send your child to a private school and then university to do a three-year degree. However, if you plan to send your child to a good public school and university to do a three-year degree, the amount to save is about R1 700 per month.

These are savings required if you expect investment returns of 10% a year, and will increase your premium with education inflation of 9% every year. Remember that your salary may increase every year with inflation too.  Reaching your financial goal is therefore much more attainable if you start at a reasonable level, but keep increasing your premiums every year as your salary increases.

Image: Ideas magazine