As schools remain closed for the majority of students, parents and children are adjusting to learning from home. Unfortunately the uncertainty seems set to continue in the coming months.
Dare I mention, it’s also this time of year when summer term fees for private schools become due and many families are facing financial uncertainty. You may be reluctant to pay fees in full, given that your child won’t be attending school in person. Some schools are offering discounts but teachers are still working and providing an education, albeit in a virtual format for most.
Private education is becoming increasingly expensive in the UK, with the average private education costing £300,000 per child – and that’s without extra charges such as boarding, ski trips or music lessons. You might be looking at as much as half a million pounds in ten years’ time.
The Independent Schools Council (ISC) is a body that protects and promotes the sector. Indeed, pupils in ISC schools account for around 80% of the total number of pupils in independent schools in the UK. According to its 2019 report, fee increases have averaged 3.9% since 2010, rising faster than inflation and wages over the same period. They were actually even higher in the preceding ten years, averaging 6.6% between 2000 and 2010.
Although private school fees continue to rise, if your child is settled in private school, there is an emotive commitment to continue with private education. For those considering it, there is an incredibly strong commitment to make it a reality.
Top tips for funding independent school fees
There is no magic bullet to paying for fees, but here are some ideas:
Start saving early
After buying a home, children may be your next largest expense; especially if you choose private education. The earlier you start saving, the greater potential for your investments to grow.
Are your school fee savings working for you?
Cash has its limitations. Interest rates are at historical lows and inflation is currently 1.5%, so if your savings are not earning more than inflation they are actually falling in value every year.
Depending on the timing of when you are expecting to pay for education costs, there may be a better investment strategy that aims to beat inflation over the long-term
Ensuring you are funding your school fees efficiently
When you are paying for school fees it’s important to ensure these are being funded from the correct source so that your other financial objectives and goals are not compromised.
Protect your children’s education in case you are no longer able to fund their education costs
There is no doubt that the current situation has left many people wondering what would happen if they became very ill, unable to work or even died from the virus. Unfortunately, and even without the virus, any one of these things could happen to any one of us.
There are a range of insurance options that can help protect you and your family and cover the ongoing costs of education.
How financial planning can help?
If you’re uncertain about the best way to save for school fees, an EQ financial planner will be able to assess your requirements and put together a tailored plan:
1) Cashflow modelling
Cashflow modelling is used by financial planners to forecast your future finances. It shows you in real time how much money you could have in the future and whether you are on track to achieve your goals. With the assistance of cashflow modelling we can:
- Ensure you are funding your education expenses in the most efficient way, without affecting your other goals and financial objectives.
- Review your overall financial situation and help you identify shortfalls or ways to improve your financial plan.
- Continue to update, monitor and review your finances over time and provide sound advice along the way.
2) Tax-efficient investment strategies
We can help determine the correct savings/investments strategy and level of risk to take, in order to achieve your financial objectives and pay for private education. For example the benefits of investing into a Junior ISA on behalf of your children have recently become even more attractive.
3) Protect your children’s future
We can help you plan for for contingencies and emergencies, should you no longer be here, fall critically ill or be unable to continue working.