We are all aware of how expensive a new baby can be, but we often forget that our beloved teenagers don’t come cheap either. We all want to give our children the best start in life, generally with a good education as a top priority. Not only that but many of us want to try and fund our children’s education ourselves.
Even if this is still a few years away it’s likely that these hefty fees won’t be decreasing any time soon, so the sooner you can start putting some money aside the better. The earlier you start saving, the more you’ll be able to support their future.
Funding your child’s college run into the tens of thousands, if you only have one child. If you are planning to have more children you will need to dig even deeper into your pockets.
First things first, decide how much you need to save. Having a goal in mind can make saving a lot less intimidating. Then need to decide what you will do with your savings. We generally recommend investing this money. Investing typically involves committing your money for longer periods of time in the hope that you will get a better return than you would by saving in a deposit account. You can decide on the amount of risk you are willing to take. Chose a level of risk that you are comfortable with and won’t have you second guessing your investment. Another thing to consider is the time period involved. Roughly how many years are there until your child is due to start 3rd level education? If this is within 5 years, investing may not be your best option. You may be more comfortable saving using a savings account. However, if you won’t need to access this money for at least 5 years, investing is the way to go. At Rockwell, we will help guide you to choose investments suitable for you and designed to meet your goals. Our expertise in investment management will help take some of the pressure off, allowing you to focus on your own goals.
Here are some of our tips to help you get started:
Create a habit
One of the best starting points for creating the habit of saving is to create a savings plan. Our greatest piece of advice is to get into the swing of things sooner rather than later. The quicker you start the habit, the quicker you will see the benefits of it, however, remember you must be patient nothing is going to happen overnight.
Try to follow this plan and commit to making regular savings. For example, why not try to put away a portion of your child benefit payments if you can? If this isn’t feasible, no need to panic, try to aim to save a realistic percentage of your household budget each month. Any leftover money can be used to top up the funds.
Here is some food for thought, if you were able to put away the monthly child benefit payment of €140 from the child’s birth until their 18th birthday (when the payment ultimately stops). If this accrued sum of money had a net return of 3% per annum, then you would be left just shy of €42,000. €42,000 also happened to be the estimated amount of money it takes to put a young person through college. This just goes to show how little amount of money builds up over time.
Understand your spending
Keep an eye on your bank account and statements. Start to notice where you are spending your money you may be able to make simple cuts to your discretionary spending habits. This can free up more of your income to add to your savings. Not only that but monitoring your spending can help give a realistic idea of what’s affordable savings-wise.
Start early
Simply put the earlier you start the less you’ll have to panic down the line. Try to remember small regular savings can grow immensely over a long period of time.
Prioritise Savings
Try to prioritise savings, a good way to do this is to make your savings the first thing you pay into each month. Once you are paid, send off that money. Don’t leave it lying around and tempting you to be spent.
Open a different savings account, this might reduce the temptation to dip into your savings for day-to-day expenses.
Evaluate your options
It is important to review all your options. As we have previously discussed there are different approaches available to you. You could use a traditional savings account method to accumulate your savings or you could look at investment options. The best method for you depends on the risk you are willing to take and the time you have before your child is due to start college.
Saving for education can seem like a daunting task, but it doesn’t have to be. If you save and invest your money wisely you will be able to easily build up funds. You don’t have to be a financial whizz in order to finance your children’s education, with a little bit of financial advice and a financial plan you will be on your way to sending your kids to third-level education.
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If you are a parent or guardian that is looking to know more about setting up or changing their savings funds, email one of our expert financial advisors today at hello@rockwellfinancial.ie or call us on +353 1 296 6120.
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