Saving for your child’s education can help secure their future, but with so many other expenses it can be easy to tell yourself you’ll do it later. But, with a stable financial plan you can save for your child’s future no matter how much money you earn. Rufaro Fanadzo looks at options.
When must I save for education?
It’s never too early! If you start around the time your child is born you have five to six years before they start school. Start saving the moment you plan on having children.
How much money can I put aside?
Whatever amount you are able to. A scheduled transfer is best – if you do run into difficulties, you can simply contact your bank, stop your debit order and restart it again when you can.
Three ways to save
1 Education policy
Offered by various life-insurance companies, these savings plans pay out at set stages, for example when your child turns 18. Companies offer different options that cater for your needs. In most instances, you can save as little as R200 per month. Your money earns interest and is able to grow in value.
2 Savings account
This is possibly the easiest way to save, but your money doesn’t earn much interest. Also, in the long run, as your money grows it can get taxed. The money is available at any time, but this also means you may be tempted to withdraw money whenever you want.
3 Unit trust investment
Unit trusts are funds managed by experts for various needs. The funds can be accessed through an accredited financial adviser, broker or yourself. They offer liquidity (the shares can be quickly bought or sold) and flexibility (you can withdraw when you need to). This type of investment gives you good long-term returns on cash savings – usually even better than what an education policy offers.
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