Meeting the Costs of Children's Education

Five Steps to Save for Kids’ Schooling in Australia

Aug 16, 2009

Save for kids' schooling by estimating school fees, setting savings goals, using Baby Bonus, pre-paying school fees and encouraging monetary contribution from family.

According to the 2009 estimates by the Australian Scholarship Group (ASG), parents will spend an average of $5500 to send a child to a state primary school and almost $6000 for a child attending a state secondary school this year.

Parents sending their children to private schools will fork out even more – an average of $13 000 for a primary school student and a $22 250 for a secondary school student! The figures are staggering, even though they include extras like books, uniforms, travel and excursion levies.

For new parents, the message can’t be clearer. They must work out ways to meet the costs of their children’s education. The following are five steps to save for kids’ schooling in Australia.

From the figures mentioned above, it’s obvious that parents planning to give their children private school education will need to plan ahead and start saving and investing early. The 2009 School Costs Estimates from ASG is a good source to find out what school fees are involved and how much they cost.

However, each school is different. There are even varying fee ranges among private schools. So use the estimates as a guide but do some groundwork. Ask friends and family and attend school tours organized by schools, both private and public, to estimate school fees.

Set Clear Savings Goals

Even if parents are not sure how much they need to pay for their kids’ education, they should set savings goals and start saving early and regularly. Nicola Field, author of Investing in Your Child’s Future [Wrightbooks, 2008], says that it helps to make saving goals specific.

“You’ll be more likely to stick to a clear goal like ‘deposit $20 each week into a savings account’ rather than simply ‘save some money’,” she writes, adding that it’s crucial for couples to discuss their goals together and work as a team, tracking their progress on a regular basis.

Make Good Use of the Baby Bonus

Beginning July 2008, upon the birth or adoption of a baby, new Australian parents are entitled to the government’s Baby Bonus worth $5000. There are no restrictions on how to spend the Baby Bonus but money savvy parents will definitely use this sum or at least part of it to kick-start their children’s school funds.

Field points out that if the $5000 and the weekly deposit of $20 with a 6% interest (after tax) are invested over the span of 12 years, the savings and investments will grow to more than $28 500.

Prepay School Fees

Some private schools allow parents to prepay for their children’s school fees for up to 10 years in advance. Since schools typically increase their fees every year, prepaying school fees for a few number of years can save parents plenty of money.

Encourage Monetary Contributions from Family

In many families, close relatives such as grandparents, uncles and aunts like to give money as gifts to kids. Make these gifts part of the kids’ education funds. It may also be a good idea to encourage small monetary contributions from close relatives instead of having them buy impractical Christmas and birthday gifts that are soon forgotten.

In order to meet the rising costs of children’s education, parents need to plan way ahead. To save for kids’ schooling, estimate school fees, set realistic and clear savings goal, make good use of the Baby Bonus, prepay school fees and encourage monetary contributions from close family members.

The copyright of the article Meeting the Costs of Children's Education in Kids & Money is owned by Wei Yin Wong. Permission to republish Meeting the Costs of Children's Education in print or online must be granted by the author in writing.