Parents want the best for their children and education is top of the list of priorities with many households. Many parents are turning to private schooling over government schools as the trust and confidence and quality of education is found in the former. The question is, where do you find the money to pay for private education.

I spoke to Jenny Crwys-Williams on her show on Radio 702 this afternoon and we uncovered some of the huge costs of Private Schools. The Ridge in Johannesburg was one of the most expensive at a whopping R60 000 per year. The figures extrapolated to over R600 000 to educate a child to grade 7.

I was on Midlands Meander at the time and passed by Michael House so thought I would do some research on the costs. Found the First year to be R206 018 with the “Acceptance fee, and Development Levy” included.

Jenny’s question was, “How does one save for this type of expense?”

My answer was:

Save as madly as you can to build up as much capital as possible to soften the financial blow. Your ally is compound interest which needs as many real returns as possible over time.

Be Realistic

Realistically, parents do not have much time to save. From birth to the first day of school there are only 5 years or so and then education costs cover the next 15 years plus. If you decide to borrow money to fund education you simply pay much more for it, so this is not the ideal solution. The funding should come from your monthly household income which means you will need to balance your budget carefully and honestly giving way to other living expenses the more you allocate to education.

Target a stage of Education

You could consider saving madly from birth to grade 7 using the capital that you mange to accumulate towards affording a better secondary education. With the power of compound interest and saving from birth through primary and secondary school you could accumulate a substantial amount which could help towards a better option for varsity.

Where do you save?

There are many investment vehicles which will help you save towards education costs. Unit trusts, exchange traded funds, endowment policies to name a few. You should seek the advice of qualified financial planner to help you choose an appropriate option.

One of the lessor considered options for providing funding towards your education costs is your access bond. If you saved extra in your bond you immediately earn the same rate of return that your bank is charging you. No costs, no tax, no risk of losing capital and immediate access to funds when you need them.

Careful planning for your children’s education into the future will ensure that you find the right balance of quality and affordability.