If you have children, you may already be thinking about how you are going to cover the cost of the future education. It is very true that education is not cheap and parents can expect to pay well into the thousands of dollars, if not hundreds of thousands of dollars, for their kid’s education. This ultimately means that you should start preparing for your children’s education as soon as possible, so you are financially ready when they are old enough for higher learning. Below are some tips for starting a saving and investment strategy to cover the costs of your kid’s education.
Saving for your children’s education should be considered a long time goal because it will take more than five years to raise the necessary funds. You should set a clear and concise goal by determining how much money you want to have set aside for your children’s education and when you want to have the money available to use. This will help you select right savings and investment opportunities to fit into your long-term goal strategy.
One of the first things you can start doing to prepare for your children’s education is to start a special savings account. You can set some money aside each week and place it into this account. By creating a separate account, it will reduce the risk of spending this money too early. You should also encourage your child to contribute to this savings account by placing any money received as a gift into this account. In addition, once your child starts working, he/she should be encouraged to contribute a portion of the pay cheque each week to this account
Since you need to raise a significant amount of money to cover the costs of your children’s education, you should also start thinking about investments opportunities. This will help to grow your money at a faster rate and make more available to your child when needed. Blow is a look at several investment opportunities that could help you save for your children’s education.
- Shares. Purchasing shares in a company can be a good investment that can potentially earn you a nice profit. However, it does not come without risk, if the price of shares goes down, you will end up losing money instead of earning money.
- Term Deposit. A term deposit is more like a savings account and requires you to place a set amount of money in an account for a set period of time. At the end of the agreed upon time period, you will have access to the money plus the set amount of interest. This may not earn you as much profit as some other riskier investments, but it is a guaranteed option, backed by the government.
- Education Funds. An education fund is specifically set up to help you save money for your children’s education. Be sure to check out several different fund options before making your decision of where to invest. You want to take into consideration if there are fees associated with the fund, how much you are required to contribute, what your investment options are, and when the money will be available to you when making this decision.
- Managed Funds. With this investment scheme, your money is grouped together with other investors and distributed into various investment opportunities. The investments are managed by an investment manager who makes the decision as to where to invest your money. This can be a good option, especially for those who do not know a lot about the investment industry.
The government offer low-interest loans to student through its HECS-HELP program. These loans help student cover the costs of education, and repayment of the loan is deferred until after the student graduates. You should check to see if your children qualify for one or more of these loans to help cover some, or all, of their college tuition expense.
It is always a good idea to seek the advice of a financial counsellor for more information about any investment opportunities. A qualified counsellor can help you decide what type of investments are best for you and will help you reach your long-term goals. The important thing is to start planning early, so you have enough time to save all the funds needed to cover your children’s education.