The time to start planning is now, by creating a savings plan for your kids future education.
According to government figures, by 2025 the average cost of a three-year degree course will have reached $50,000 and that’s not even including living expenses.
That means that most kids starting out on their career paths will face the daunting prospect of having to pay off huge student loans before they can even think about starting to save for a home of their own.
Putting savings strategies in place now to cover, or part cover their tertiary education, will mean that once they start to earn, they can put it towards a deposit for a property.
Earning to save as opposed to earning to pay a debt is a much more uplifting experience and will get them off to a much more positive start in their career, and get them out of the family home sooner!
A few ways you can save:
Start Early: set up a bank account as soon as your kid 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. If you did not do this and your kids are older, don’t be disheartened – start now. It is never too late to start saving.
Cash Not Trash: from the moment your kid is born, it is showered with toys, teddies and gifts from family and friends. Most of these gifts end up in the trash or are given away as your kid grows. Instead, encourage your family and friends to give token gifts and to put money into your kids savings account.
Piggy Bank: even though we live in an increasingly cashless society, we still end up getting weighted down with the shrapnel of loose change. You may not have a piggy bank, but find a sturdy receptacle and encourage the whole family to throw in their loose change. Cash it in the bank every so often (you will be amazed how much you can get in a short time) and put it straight into a savings account.
Earn Their Keep: as your kids grow older, encourage them to start earning and saving their own money. Start by paying them pocket money to do small jobs around the house and then when they are old enough, get them out earning at a weekend job. Teach them to save a fixed proportion of their income towards their education. Aside from contributing to the education fund, this practise will set them up for life with a savings ethic that will ensure they can continue to support themselves into a comfortable retirement of their own.
Incentivise Saving: agree to match their savings dollar for dollar and see how quickly the funds add up.
Help Them Get Entrepreneurial: set up an Ebay account with your kids and help them sell some of their good condition, unwanted toys etc online, then deposit the revenue straight into their bank account.
Louisa Sanghera is a Finance Broker for Residential Mortgages, Vehicle and Asset Finance, Commercial Lending and Budgeting and Cashflow Coaching with Zippy Financial.
She has?gained more than 30 years in the Banking and Finance Industry, and since founding Zippy Financial, has become a multi award nominated expert in the field of finance featuring regularly in industry press and speaking at finance and investment seminars across the country.