January 28, 2016 by Rebecca Crommelin
Providing children with a quality education is one of the greatest gifts parents can bestow. But paying for it can be quite challenging.
Industry figures suggest that for a child born in 2015, the total cost of education from pre-school to Year 12 can range from just over $64,000 in government schools through to more than $450,000 in the private system.
Moreover, education costs come at a time when families face other challenges like paying off a home loan and setting money aside for retirement.
Simply hoping it will all work out is not a plan. The key to meeting education expenses is to lay sensible foundations from an early stage - preferably before your child starts school.
Planning for school bills can mean revising household budgets, especially if one parent is on maternity/paternity leave. It can also involve issues like whose name to invest to minimise the burden of tax.
Great advice is a good investment for families facing education expenses. It can encompass the whole family if grandparents and other relatives wish to contribute.
3 strategies to pay for education:
1. Build cash savings
Although your money will earn low, fully taxable returns, without capital growth.
2. Grow a diverse portfolio of assets
Shares, managed funds, or an investment property. The right choice for you depends on your investment time frame and how you feel about risk.
3. Add savings to your home loan
Making extra payments on your home loan can significantly lower interest charges, and the funds can be accessed via redraw.
Which is the best option for you?
There are a number of things that you need to consider, such as your current financial position, your appetite for risk, how much you'd like to save and how much flexibility you need.
We can help you to choose the most appropriate structure and savings options for your family's circumstances. A single strategy may be best or a combination of several strategies may be more suitable.
Let our team help you provide your children with the best education you can, give us a call at Mortgage Choice Joondalup & Clarkson today on (08) 9485 0090.
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