A good education gives children a great head start in life. But quality schooling doesn’t come cheap.
A public school education spanning kindergarten to Year 12 for instance, can set parents back around $60,836. For families who choose a private school education that figure can rise to $448,0341.
Faced with costs of this scale, parents need to start planning early. So, when Josh and Jess*, a married couple in their 20s, celebrated the birth of their daughter Sarah, they quite sensibly began tucking $500 each month into a high-interest savings account earmarked for Sarah’s education.
After several months of saving however, the couple were concerned they wouldn’t have a sufficient nest egg to fund the cost of the private school they had chosen for Sarah. That’s when Josh and Jess contacted Mortgage Choice Financial Planning for tailored advice.
Taking the time to understand what’s needed
As a starting point, we reassured Josh and Jess that we would cover the cost of their first meeting with us. This meant they weren’t paying for services they didn’t need, and it gave us an opportunity to be sure we could appropriately assist the couple. We also spent some time explaining what financial planning is all about - and the role their financial adviser can play.
Much of our initial meeting was spent listening to Josh and Jess – to understand their needs and goals, how they feel about risk and their plans to give Sarah the benefit of a quality school education.
As the meeting unfolded, several issues became clear:
- Josh and Jess weren’t relying on their education investments as a source of income. However they didn’t want to lock their money away as the cash would be needed at various times to pay for school fees, uniforms and other education costs when they arise. We worked through a timeframe of when Josh and Jess would be likely to dip into their investment.
- The couple hoped to achieve reasonable capital growth on their investments over the next 5-10 years to help meet school-related expenses.
- If necessary the couple could contribute more than $500 each month into an investment.
After speaking with us, Josh and Jess felt confident we understood their needs and could provide relevant, tailored advice.
Building a plan
It was clear that John and Jess’s current savings account strategy was inadequate for their goals. We set about researching different investment options so we could suggest a portfolio that would give the couple the flexibility they want plus the potential for the capital growth they need.
Based on the couple’s estimates of when they could expect to start paying school fees – and how much they’d be likely to pay, our analysis revealed that Josh and Jess would need to set aside an additional $250 each month in order to comfortably fund their preferred education for Sarah.
We carefully explained our findings to Josh and Jess at our next meeting and presented our recommendations to them. They confirmed these met their needs, and agreed to bump up their contribution to $750 each month.
Developing a tailored strategy
Based on their circumstances, we suggested a ‘diversified’ portfolio for Josh and Jess, which offered access to several different asset classes with a moderate level of risk. Along with the additional monthly contributions, this would put Josh and Jess on track to achieve their goals for Sarah’s education.
We explained to the couple that this strategy would need to be regularly reviewed to make sure it continues to reflect their goals, financial circumstances and family situation.
On track to fund a great education
Josh and Jess engaged Mortgage Choice Financial Planning to help them achieve a particular goal. This meant they weren’t paying for advice they didn’t need. The fee for ‘Single issue’ advice was $1,600+, which included:
- cash flow analysis
- investment portfolio research
- investment recommendations, and
- implementation of their chosen investment portfolio.
The couple now has a solid plan in place to help them reach the goal of funding a private school education for their young daughter.
Find out more about Mortgage Choice Financial Planning
We can help you save and invest for your next big expense. The sooner you get started, the easier it becomes to achieve your goals.