Planning for Your Children’s Future
Most parents dream of giving their children the best possible education and future. Whether this dream includes university, college or a technical school, one thing is for certain: education certainly isn’t free.
The cost of education is rising annually and it is therefore vitally important that if you want to be able to afford to send your children to further their education or support their varied third level interests, parents need to start planning ahead. The sooner you start, the easier it will be closer to the time.
How much does a third level education cost?
Recent studies have shown that the cost of supporting each child in college is about €1,200 per month of study, considering travel, accommodation, food and living expenses.
Assuming an annual cost of €12,000 (10 months’ x €1,200) over a 4-year course, that’s €48,000 that needs to be at-hand. Imagine if your child wanted to do the 1 year add on Masters! Multiply that by a few more children and you can see that it is imperative that Parents who want to be able to afford to support their children’s education need to plan well in advance.
The above costs are based on current prices, however should you take into account inflation and cost growth of 2% per annum over the next 13 years, the annual cost requirement in future terms is a more staggering €15,523 per annum.
What are the best ways to save for your child’s university fund?
- Create a Plan!
There are various education plans to help you to finance your children’s higher education. However, most importantly, the first port of call would be to calculate the potential costs per child, multiply them by the number of children you have and inflate those costs for the years before they attend college, usually at 18 years of age. Our role as financial planners is to assist you in calculating the sums involved, however the costs mentioned previously will provide you with a good starting point.
- Organise Your Finances!
Most clients prepare to save on a regular, monthly basis into their child education savings plans. For example, most clients allocate their monthly child benefit payment along with some additional monthly savings. Start with an option/amount that suits your cash-flow best, and if things change you can adapt the plan payments going-forward.
- Should you invest your funds or keep them on deposit?
There are many ways to start saving for your children’s education. You can start a regular savings account at your local Post Office, Credit Union, or Bank. Unfortunately, interest rates remain at historic lows and therefore savers are not being rewarded for keeping their hard earned savings on deposit. As Financial Planners, our role is to discuss a range of investment options with you.
Depending on your appetite for risk and the term until your child/children reaches college age, you may wish to construct a more diversified plan. A solid, global spread should ensure that over the medium-longer term this type of strategy will outperform mere cash deposits and make these funds work harder for you and your child.
Whatever option you choose, you need to start planning today.
Saving for your child’s education is typically a long-term savings goal. As the cost of a university education is set to rise, the need for parents to carefully plan ahead becomes even more apparent.
If you need some financial planning assistance, Eolas Money can help you organize the most appropriate structure for your children’s education savings so please, don’t delay in making contact with us.