By Sydney Mabuza, 23 January 2013
So how do loving parents make sure they have the financial means to give their children the best education possible? Sydney Mabuza, Sanlam Sky Solutions’ Qwa Qwa Free State branch manager says that starting to save as early as possible in your child’s life is definitely the key.
“A good state school could cost anywhere between R8 000 and R20 000 a year. Then, once your child has completed matric, you could pay more than R50 000 a year for further study at technikon or university.” These high fees may seem impossible, but starting to save when your child is born will put you in a very good position to pay these costs.”
He recommends saving around R300 a month, and putting this money into an education policy – a product ideal for saving for a child’s education. “So by the time your child turns six (and you started when your child was born), you could have saved more than R26 000, if your policy makes interest of seven percent. By the time your child is 18, you could have saved R126 000 (although that will depend on inflation and the market’s movements over that time).”
“Right now, many South African parents are already struggling with the higher costs of everyday goods, such as food, petrol and electricity. He says that, even if you think you can’t find R300 a month, often it is just a matter of saving in a few small areas. “Try to save on water, electricity and airtime. Buy your own coffee, don’t get it from a coffee shop. Or consider not getting DSTV.”
Mabuza suggests parents include an inflation protector in the education policy they choose. That way their policy will always beat the rising costs parents face daily, like higher food prices. The education policy should also cover parents should they lose their jobs, become disabled or die.
But, according to Mabuza, it is not all the responsibility of the parents. Children should also save for their own education. “If you have a junior degree, and you want a higher degree, like a Masters degree or a doctorate, as a child, you should be saving for that. Even as a young child, you could still help save by working at grandpa’s tuckshop during the holidays.”
Mabuza says, “A small amount of savings can make a huge difference to a child over time. But try not to use the money in the education policy before the payout date. If you do, you will lose all those savings you worked so hard to build up.”