Prepare them for a very different tomorrow
With Artificial Intelligence (AI) and climate change giving rise to new careers in robotics, solar energy generation and space tourism, a solid grounding, particularly in subjects such as Science, Mathematics and Technology, will continue to open a variety of career options. Smart parents know that a good education remains the surest way to safeguard your child’s future.
What the numbers say
If your child starts Grade R this year, with education inflation of 9% (which is higher than general inflation), you can expect to pay around R1.6 million for their public schooling up to matric and a three-year university qualification. If you choose private schools and university, the costs double to R3.7 million.
But what does this mean?
For this year, your monthly costs for school will be around R3 500 for public school and R8 500 for private school. This may be a significant chunk of your monthly budget and excludes additional costs of uniforms, stationery, extramural activities or extra tuition.
If you’re already saving for your child’s education, you are probably not too stressed. But the reality is that 55% of urban South African parents are not saving for their child’s education, according to the latest Old Mutual Savings and Investment Monitor.
Says Karabo Ramookho of Old Mutual Personal Finance: “A financial advisor can partner with you to recommend and choose a solution that takes your specific needs and circumstances into account, including your budget and timeframe. Finding R400 in your monthly budget now to save for your child’s education will ensure that when they reach high school or university, you will be in a much better financial position to cover some of their costs.”
Investment Options to consider:
- a Tax-Free Savings Plan, which offers you tax-free growth and flexibility. However, opening one in your child’s name can impact them later, if they want to use this as a savings vehicle, as the lifetime limit (currently R500 000) will apply.
- Old Mutual’s SmartMAX Focussed Plan ensures more disciplined savings through regular contributions over a fixed term. These plans also offer premium protection to ensure that the investment goal is reached if the parent becomes disabled or passes away.
- Old Mutual Invest Flexible Plan lets you save regularly or with lump sums and gives you access to your money when you need it.
- Unit Trusts – Old Mutual has a comprehensive range of unit trust funds which offers you the flexibility to choose one or more funds based on your needs, goals and time horizon.
Ramookho adds: “While the education costs can seem overwhelming, proper planning, a partnership with the right adviser and the discipline to stick to your financial plan will ensure you are able to give your child the valuable gift of a good education.”
To speak to a qualified financial adviser, call 0860 60 60 60.
Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and Life Insurer