Saving For Your Childs College Education

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The Importance of Saving

Like all parents, you are committed to providing the best for your child. Certainly one of the most important factors in the future quality of life for your child is a good education.  But to quote the old song, “the best things in life are free, but you can keep that for the birds and bees, give me money” a college education is expensive.

Many investment analysts in South Africa will point out that the chances of finding a satisfying, long term job are much less for those without a tertiary education, so providing funds to help your child achieve this is of vital importance.

It has been estimated that the cost of a good quality college education in South Africa can run into the hundreds of thousands of Rands, a sum that isn’t easy to take out of your average monthly budget, so the importance of  advance planning for this expense through savings can’t be over-emphasised.

And it’s not just the college tuition fees you’ll need to cope with. There are a myriad of costs such as accommodation, text books, computers, both hardware and software components, not to mention basic living costs that can make education a very expensive business.

So it’s important to begin your savings plan as soon as possible. It has been said that it’s never too late to begin saving; while this is true, it’s far better to begin earlier to ensure you have an adequate savings amount to help your child cope with college.

Education fees increase on average by around 3.5% above the national inflation rate. This puts the annual increase currently at around 9% each year, adding to the importance of starting as early as possible.

But how much should you be aiming to save to put your child through a college education?

Obviously this depends on a number of factors, such as the length of time involved, accommodation costs and the type of course undertaken, but reasonable estimates for a 3-year business degree are in the region of R350,000 – 400,000.

To be able to provide this amount of support for your child through public school and on to university, you would need to begin saving an amount of around R1,500 each month from the day your child is born. In addition, to cope with inflationary costs, you will need to increase this amount each year. Without increasing your savings amount to cater for inflation, your monthly savings would need to increase to R3,200 each month.

If this seems an exorbitant amount, remember that the biggest reward you’ll get from your efforts is seeing your child gaining the many benefits of a college education. Get that savings account open now!

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