Earlier this year, The Australian published an eye opening article, which outlined the cost of sending your children to private school. The article goes on to talk about how much private school fees have jumped over the past decade, and that schools need to justify fee increases on the back of a slowing economy and sluggish wage growth.
Here’s the state of play:
It’s all too easy to look back and grumble at what has happened, and frown upon the so called ‘elitist’ education system. As long as consumers can see the value in a service, no matter what the service is, consumers will pay the price. Someone once told me, “price is an issue in the absence of value,” and I think this is true.
According to ASG, the largest provider of education scholarships in Australia, the cost of sending your child to private secondary school is approximately $395,406.
Like most things in life, whether it’s the purchase of a new home, an investment property, a new car, that big holiday, without planning for, and putting in place a savings program (in advance), it can be very expensive! These big ticket items become a lot easier to not only purchase/acquire, but also manage when you’ve got a strategy, a plan – your game plan.
During a conversation with a client today, he described to me how comfortable his retired parents were, and that they no loner have to worry about money every again. He went on to say that the only reason they were able to live their life this way, is because they had been planning and managing their lives and finances prudently for a long time. Let’s image they hadn’t planned or managed their affairs at all over the years. The probability of them living the lifestyle they live now, is probably quite low.
If you’re serious about planning for you future, and the education of your children is important to you (through private school), here’s how much you need to save each month to have enough money to send your child to private school (secondary education only).
Find the age of your child on the left hand column, and select the rate of return you expect to receive on your investment, and the corresponding number is how much you need to save/invest each month.
If you’re investing in markets like property or stocks, you probably want to refer to rates of return on the far right. If you’re investing in markets like cash or fixed income, you probably want to refer to rates of return on the far left. And for those of you with diversified portfolios, well, somewhere in the middle.
Here’s the key points:
- If you want to send your kids to private school, design a plan, and execute it.
- The longer you go without investing for it, the more you need to save, or the more risk you need to take, or fund it from cash flow later.
- The younger you are, the less you need to save.
- Investing in cash for long periods of time doesn’t seem like a good idea over the long-run.
- Investing in property and stocks should reward you over the long run, and help reduce the level of monthly savings.