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The cost of educating a child is for many parents across South Africa- their number one concern. Especially when one factors in sharp increases in education inflation, with the figure for 2017 expected to be as high as 9.5%.
Alarmingly, education inflation is higher than South Africa’s Consumer Price Index (CPI) and this gap has widened from around 2% in the early 2000s to a probable 4% in 2017. This means that a parent whose child starts grade R in 2017 can expect to pay between R1 332 112 and R3 011 415 – for public or private education respectively. This rand amount includes primary school, high school and a three year University qualification.
He also notes that parents are not saving enough to be able to provide for their children’s education and the related inflation of these costs. He references the 2016 Old Mutual Savings and Investment Monitor, which revealed that 54% of urban South African parents are still not actively saving for their children’s education.
Saving for education is like saving for your retirement, you wouldn’t start a year or two before you need to retire. So the best course of action is to start saving as early as possible. Even if you can only afford a small amount to begin with, the important thing is to start. There are a number of educational policies or savings instruments in the market and you should ask your financial advisor to assist you with a financial plan.
He also notes that parents should consider a number of additional costs, beyond only the fees of educational institutions. You also need to factor in the costs of school uniforms, text books, stationery, transport, food, extra lessons, extra mural activities, pocket money, accommodation, etc. when putting together a financial plan for your child’s education.
The gift of education is the best thing you can offer your children as it will prepare them for life and will give them a good start. Furthermore, a well-educated youth is essential to the sustainability of South Africa’s economy.