Saving For Your Children’s Education – What You Need To Know

Saving For Your Children’s Education – What You Need To Know

Some good work now can create a better future.

There are not many places in the world where education is truly free. Even where you have access to free teaching, the cost of living and learning materials can still all add up. So, when you get to the stage in life where you have a child’s future to plan for, it usually becomes necessary to factor in saving to cover the cost of education, although you may have to find a loan it is preferable to have at least some savings.

Planning ahead is crucial to success

Whether you’re looking to cover the cost of private school fees, a university course or vocational training, the earlier you’re able to start saving and planning for it, the better. For adult children at university it is possible for them to take out guarantor loans where the repayments are guaranteed by you. But crucial to the planning process is working out how much you’re going to need to cover the cost of that education. You also need to engage in some scenario planning – if you’re in a couple, what happens if one partner stops work or you split up? If paid for education for your children is a shared goal then all of this needs to be factored in from the start.

Make sure your finances are in good shape now

Tax and financial planning for retirement, or contingencies if you’re unable to continue to work, need to be in place before you start saving for your child’s future. It simply doesn’t make sense to put money aside for education and not to cover your only living costs in retirement, for example. It’s also crucial to ensure that you don’t owe the taxman anything that could later have to come from savings acquired for your children’s education – and that you’re not overpaying your tax and wasting money that could be saved.

Use the most tax efficient savings method

There are a number of ways to ensure that your savings are as tax efficient as possible, such as putting the money you accumulate into an ISA. The more tax efficient your savings, the larger the fund you will be able to create to cover the future cost of education. It’s also worth looking into where you will find the best interest rates. Although interest rates have started to go up again they remain low for savings – but there are better options available if you’re willing to lock in the cash for a longer term.

Don’t just look for the big savings

When your savings goal is as sizeable as an entire education it can be tempting to focus on the best ways to save a lot. However, all of the smaller savings will add up too so don’t ignore the opportunities to add just a little to whatever you have. This means it’s worthwhile to budget better, cut back on luxuries and perhaps forgo cars or holidays so that the cash can be put to better use.

Are you eligible for rewards?

Some savings accounts offer rewards in return for depositing your education savings with a specific financial provider. This will depend on where you are in the world but it’s always worth looking into, as that extra cash back or interest could make all the difference.

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