Planning ahead is key to successful education savings, says Liezel Gordon, marketing manager at Metropolitan.
- Make education savings part of your budget and set a goal – with a fixed deadline – to encourage you to become a savvy spender. Putting money aside for education each month allows you to adjust to living on a tighter budget. The more disciplined you are about this, the easier it becomes.
- Think about the rising cost of education. Keep in mind that education savings should keep up with inflation. It’s advisable to increase the amount you save by a minimum of the Consumer Price Index (CPI) rating plus 4% per year, to cover rising school fees and related costs. Generally, if inflation is at 6%, then education inflation will be around 10% (CPI of 6% + 4%).
- The sooner the better: it’s never too early to start saving… from birth is preferable! The less money you have to save each month, the smaller the impact on your monthly budget.
- Use an education plan to protect your money. By saving in an education plan, your money will be secure until you need to access it. Liezel explains, ‘Make sure you understand how the different plans work so the plan you choose meets your needs. For instance, consider whether you need access to the money annually to cover expenses like school fees, uniforms or stationery. Or perhaps you need to save in a disciplined way over a longer period to eventually contribute to studies after school.’
- Speak to a financial adviser. A financial adviser can do a free, no obligation and confidential financial needs analysis to help you identify and prioritise your needs, as well as recommending product solutions to fit your pocket. For more info, visit Metropolitan.co.za