At this time of year many parents are preparing for the next chapter in their children’s lives, whether it’s starting school in September or heading off to University. 

Private School fees and the cost of University are increasing year on year and for many people the cost of putting your child through school and university is a daunting one!

Private School fees were a hot topic in the election debate and with a Labour government now in place, the added extra VAT is likely to see fees increase. For those considering private education, this could have a substantial impact on the amounts needed to fund a child’s education, starting at 5 and finishing school at 16 or 18.

The average cost for a day pupil is in the region of £20,832 per annum and £37,032 for a boarder. Source: Independent Schools Council Census and Annual Report 2022

Although this looks frightening, especially if you have more than one child, with sensible planning it can be achievable without ending up with a huge mortgage or stopping the family holidays for the next 15 years.

Planning

The best advice anyone can give is to plan! Start planning early, the earlier you begin planning the easier it will be.

Most of us don’t begin planning for our future when we’re in our teens, especially for our future children’s education, but people who plan are normally those people who achieve. You can start a DIY financial plan yourself or you can visit a professional financial planner who will develop a plan with you.

Saving and Investing

The question that everyone asks is where should I save?

The answer is different for everyone, but in its simplicity a lot depends on how long you have to save for. Will you need the funds in the next couple of years or have you got 5 - 10 years or more?

If you need access to the funds within the next few years then you will need to be saving rather than investing. Short term savings should be put in deposit based accounts, such as Cash ISA’s, National Savings and high interest savings accounts. These types of saving vehicles are the safest place for your money and you can find out which accounts are offering the best rates by shopping around. The internet has numerous websites comparing each account, but beware the best rates are not always the best for you so check the terms carefully!

If you have more than 5 years to save then you can begin to be a little bit more adventurous with your money and seek out better returns by investing your money. Longer term savings can be invested in Gilts, Corporate Bonds, Shares and Property.

Create an investment portfolio that’s well diversified so as the famous saying goes ‘don’t keep all your eggs in one basket’. Another important tip is to make sure you keep your savings and investments in as many tax sheltered vehicles as possible like ISAs for example.

Help from Grandparents

The children’s Grandparents can often bring financial support when funding school and University fees and, if properly constructed, inheritance tax (IHT) may be saved. If the Grandparents do offer help or you’re a Grandparent thinking of helping then it is recommended you seek professional advice.

Planning for the future

If you’re interested in finding out how much is enough for you and your family’s future, but you don’t know where to start then try our modelling tool ‘Truth About Money’. You’ll be able to enter details on your current financial position and the cost of educating the children and then see whether you’ll have too little, too much or just enough money to help cover the cost of school and university fees.

September 2024