How to Plan for Your Child’s Education Costs in Australia
Access to good education is one of the greatest gifts you can give your children, but it doesn’t come cheap. Whether it’s private school fees, university tuition, or even helping them with textbooks and other supplementary costs along the way, the costs can be significant.
The good news? The earlier you start planning, the greater the payoff.
When Should You Start?
The best time to start is now!
Time is your greatest ally when saving for a big future expense. Starting early means:
You can contribute smaller amounts regularly instead of scrambling later.
Your savings have more time to grow through compounding.
You’re less likely to need to dip into debt to cover costs.
Even if your child is still in nappies, beginning now can make the journey far less stressful.
How to Start Saving and Investing
Be sure to match the strategy to your timeframe: If you have 10+ years, you can afford to invest into a growth-focused investment, however, if you have less than 5 years, you may want to consider a safer, more stable strategy to protect your investment.
Automation is key: Treat your education savings like a non-negotiable bill. If you automate the process, such as having direct debits into the investment each week, it will be far easier to stick with long-term.
Selecting the right investment: There are various routes you can take, some popular options include:
High interest savings accounts (safe, simple, but may not keep pace with inflation).
Education Bonds (tax-effective for education purposes but with certain limitations to annual contributions).
Managed funds and ETFs (generally require a long investment timeframe to avoid market fluctuations impacting short-term access).
Offset accounts (can be beneficial to save interest against your mortgage while building an education fund).
Things to Consider
Different investment structures can have very different tax outcomes, it’s important to assess your options to decide the best strategy to implement.
Your child’s interest may change as they grow, ensuring your plan has flexibility is crucial.
Are you planning to grow your family further? Establishing a plan for multiple children now may be beneficial.
Common Pitfalls to Avoid
Waiting to start planning until your child is older will leave you playing catch-up, and large annual contributions you may not be prepared to pay.
Not assessing your investment risk appropriately could mean that you invest too conservatively early on, or too aggressively close to when you need the money, which both impact your overall outcome.
Being aware of the fees associated with the investment or savings strategy you undertake, which could eat into your returns.
Lacking structure and discipline, or dipping into the savings, can significantly impact your progress.
How a Financial Adviser Can Help
Saving and investing for your children’s education is more than just starting a savings account. It’s about structuring a plan that works for your family’s unique situation.
A financial adviser can help you:
Forecast the education costs you might expect for public or private schooling.
Select the most tax-effective and flexible investment structures.
Set up automated, disciplined saving strategies.
Adjust the plan as your circumstances or goals change.
Ensure your education savings fit into your overall financial plan, so you’re not sacrificing your retirement or other priorities.
The earlier you start and the more intentional your plan, the greater the opportunities you can give your children without financial strain.
If you’d like to establish an effective strategy to save for future education expenses, I can help you put a clear, personalised plan in place.