As parents, you want the best for your kids and, perhaps selfishly, don’t relish the prospect of having your 35-year-old offspring cramping your retirement by still living at home, so it’s a great idea to start planning for the future now, by creating a savings plan to pay for your child’s education.
According to government figures, by 2025 the average cost of a three-year degree course will have reached an eye-watering $50,000.
And that’s without living expenses.
If your child intends to become a high-flying business lawyer or doctor, then paying off a titanic student loan shouldn’t be a problem.
However, most kids starting out on their career paths will face the daunting prospect of having to pay off huge student loans – and that’s before they can even consider starting to save for a home.
Of course, you don’t have to reach the government’s projected target of $50,000, but by saving regularly from the birth of your child, you will be able to build up a considerable fund, so your child can concentrate on their studies later in life, rather than worry about their course fees.
How to save for your child’s education
Set up a bank account as soon as your child is born and set up a direct debit from your current account, however small an amount, to ensure a steady drip-feed of funds.
Shop around for an account offering the best interest, and once a nest egg grows make use of long-term deposit accounts for higher interest rates.
Cash not trash
From the moment a child is born, it’s showered with teddies, toys and other gifts from well-meaning friends and relatives.
Most of these gifts end up in the trash or are given away as your child grows.
Instead, encourage your family to give token gifts and to put money into your child’s savings account.
Even though we live in an increasingly cashless society, we still all end up getting weighed down with the shrapnel of loose change.
So, lighten the load and pop it in your child’s piggy bank instead.
Earn their keep
As your children get older, encourage them to start earning and saving their own money.
Start by paying them pocket money to do small jobs around the home and then, once they’re old enough, get them out earning at a weekend job.
Get them to save a fixed percentage of their income towards an education that will ensure they can continue to earn and support themselves into a comfortable retirement.