Education Costs
* For important information regarding the Child Trust Fund, Click here *
If you think you might wish to educate your child privately, either at primary or secondary level or even both, the message is clear: you must start saving as soon as you can.
Figures produced by Halifax in 2008 put the average fees for an independent day school pupil at £10,239 a year; and that is before you start to consider extras such as uniform, music lessons and school trips.
You might be able to fund some of this out of income but the more you can squirrel away in advance, the more flexibility you will have in the future.
There are plenty of ‘school fees planning specialists’ around but they are all financial advisers of one sort or another.
There is not necessarily any special magic involved in saving for school fees and if you already have a trusted financial adviser, they should be able to advise you.
As a rule of thumb, you shouldn’t invest money in the stockmarket that you are likely to need back within five years, so if you are saving for both primary and secondary fees, you will need a mix of investments with some capital security (such as cash deposits) and some greater income or growth potential (such as bonds or shares).
The power of the family...
Even if you aren’t faced with the prospect of school fees, you might be saving towards university costs, which have risen substantially since the introduction of tuition fees in England and Wales.
This is something your Child Trust Fund could help out with, although you have to remember that at age 18 the money is legally your child’s, and if they want to spend it on a trip round the world rather than the hallowed halls of academia, there may not be much you can do to stop them.
While you are adjusting to being back at work and meeting the cost of childcare, you may not be feeling much like adding to your little darling’s CTF. But don’t forget the £1,200 a year maximum top-ups can come from anywhere: not just parents, but family and friends as well.
If your child receives money as a christening or birthday present, you could put it in their CTF or save it in another vehicle such as a children’s savings account or investment plan (see below). You can add both lump sums and regular amounts to your child’s CTF. If grandparents or other relatives or friends want to save regularly, they can set up their own direct debit into your child’s CTF if you give them the account details. F&C’s shares CTF accepts lump sum top-ups from £100 or regular investments of £25 a month and upwards.
A fully funded CTF growing at 6% a year could reach a value of £38,281 by the time the child reaches 18, although the value of investments can go down as well as up and there is no guarantee you will get back the full amount invested.
View other relevant articles here, giving more information on Childcare Costs and Children's Savings Plans.
