The Cost of Educating Children

The most recent figures suggest it costs $400,000 to educate your child through the private system or $80,000 through the public system.  Pretty staggering. How does one afford this?

As you would expect the accountant to say, and like everything, planning and budgeting are a must. 

Someone said to me when I was first pregnant that I needed to book my child's school placement ASAP to ensure he or she got in.  So why not then also plan a budget or start to save at this time also.

Setting up another bank account with a direct debit each month is a pretty easy way to save without thinking, just as long as you can resist temptation to send those funds back to your every day working account.  If you can start saving whilst you are pregnant and for the first few years before your child starts pre-school, you are not only taking the stress out of how to educate your child but also more likely to add to your savings as the balance grows.

If you are looking for something longer term, what about a discretionary trust.  There are capital gains tax advantages of using this sort of structure.

My partner and I setup a discretionary family trust specifically for our children when we were planning to get pregnant.  This isn't so much for education but rather for future big ticket items like a car or deposit for a home.  Once we reached a decent balance we started to buy shares, a favourite of mine Argo Investments, which has the option of a Share Purchase Plan and Dividend Reinvestment Plan, perfect for us where we want to build the investment rather than needing income.