Paul's Insights: Managing rising back to school bills
According to BIG W’s Annual Back To School Report, it’s getting more expensive to send kids to school, with parents set to spend $538 per child – up 13% on last year. But this figure only looks at the basics. There can be far bigger costs looming round the corner.
School fees are a significant expense, especially for parents who send their children to a non-government school. At the top end of the scale, families are paying school fees approaching $40,000 annually – and that doesn’t include boarding costs.
Even if you opt for the public system, your child’s education is far from free. These days, kids don’t just need stationery and a lunchbox. Families are typically asked to fork out for a laptop or tablet for their child.
Footing the bill for it all can put parents under financial pressure. But like any major cost, the best way to make your child’s education more affordable is by planning ahead and putting money aside from an early stage.
There are a number of investments parents can use to grow an education nest egg – anything from savings accounts through to shares or managed funds. Exchange traded funds (ETFs) listed on the stock exchange offer the advantage of healthy long term returns, instant diversification, and low fees – so more of your money goes towards meeting school bills.
The important thing is to look for an investment with the flexibility to withdraw cash when it’s needed to pay education costs.
An alternative option is to use your home loan to save for school expenses. By paying extra into your loan on a regular basis, you’ll save on long term interest charges. Then, when school fees and other expenses fall due, the additional payments can be withdrawn through a redraw facility.
No matter which strategy you choose, it’s worth being realistic about the school you can comfortably afford to send your kids to. A financial struggle paying fees and other costs can impact family life, and it may pay to weigh up other options.
We’re lucky in Australia to have an excellent public school system plus a range of private schools that are affordable. So shop around for the school that fits your values, the needs of your children and your budget.
For more on budgeting for your child's education click here https://www.investsmart.com.au/what-we-offer/kids-education-planning