However long off it is, when your children enter secondary or higher education there are going to be costs involved. It’s easy to underestimate how much expense you – and your children – will face and if you want to be able to handle the extra financial burden, having a plan in place could be a great help.
What should I expect?
Even if you’re only planning a family and choosing schools seems a long way off, it pays to begin thinking about your children’s education early. What kind of education do you want for your child? If you’re going to opt for private education, you’ll need to factor in tuition fees which, in some cases, could amount to as much as £200,000. The price of boarding schools may be even higher. Managing the yearly tuition costs should be a big part of any savings or investment plan you put in place to deal with your child’s education.
Whether or not you’re paying tuition, when your child goes to school, you’ll face extra costs – often day to day. School trips, uniforms, sports kits and meals all feature as hidden costs throughout the school year.
If you’re children are older, or if you’re thinking ahead to the rising cost of university tuition fees, you’ll still face significant costs. As of September 2012, universities may charge up to £9,000 in tuition. If your child wants to move away from home to study, accommodation and living expenses will also need to be factored in.
It’s worth sitting down with your child to discuss their choice of university and the costs which may be included: where is their university located? What subjects do they want to study? How long will their degree take to complete? Small consideration of little factors like this might be important to determine your financial goals.
How can I prepare?
Depending on the approach you decide to take towards your children’s education, you’ll need to find a savings and investment plan to suit your family. The most suitable plan may depend on factors such as how old your child is and how long they have before they enter education.
Whether your children are older and thinking about university – or younger, and have a longer time before they enter secondary or higher education, there are plenty of savings and investment plans specifically designed for children and families. Many of these plans allow you to deposit money regularly and generate returns over a pre-determined length of time. These plans often include tax incentives, meaning you’ll maximise your returns as any growth will be protected from income and capital gains tax (tax is deducted from UK share dividends). The tax treatment involved in these plans depends on individual circumstances and the law may change in the future.
Keep in mind what you want your money to do and how long you’ll need to reach your goals. Child and Family plans are long-term strategies and you may need to leave your money within them for a period of time, usually 10 years, to fully benefit from the tax breaks they offer. Remember, if you’re thinking about an investment product, shares can fall in value as well as rise and there’s no guarantee you’ll get back your original investment.
Everyone wants to give their children the best possible start in life: when it comes to education, it’s important to know what your options are. With a little planning, involving your children in the process of saving and investing money is easy – and could be a great way to prepare for the opportunities that lie ahead.