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Child’s pay

Childs PayAre you sitting down? If you are a new parent, you might have to. The 2010 survey by LV= (formerly Liverpool Victoria Friendly Society) has revealed that the cost of raising a child for their first 21 years has topped €235,000 for the first year ever. And that excludes private school fees.

A good education is priceless. Giving your child the right environment and education to grow their potential is surely every parent’s priority. However, depending on the size of your family, the decision to go private could cost hundreds of thousands of pounds.

Choosing a school is of course an important responsibility. Whether you opt for the independent or the state sector, you will be looking for the best place for their education, moral and social development.

Many parents opt for private schools because they prefer the style of a particular school, or feel that the independent sector can offer better facilities. For parents whose careers demand frequent international travel, boarding school is the only realistic option. But did you know that, according to the Independent Schools Council, the cost of educating a child privately throughout their school career is €115,000 (going by their 2009 figures). The ISC claims that fees have increased by 5.9% in the last year, and it is likely that costs are only going to rise.

The decision to educate privately needs to be a long term one, as it can cause substantial disruption to a student’s education and friendship groups if you have to pull your son or daughter out of an independent school where they have settled because you have run out of money. Accordingly, if you put off thinking about how you will fund this cost, you risk the continuity of your child’s education.

Few families are fortunate enough to have €115,000 per child in cash, ready to spend on their education. Yet if you break the amount down into smaller, more affordable sums saved over a number of years, private education can be affordable for many families. Guardian Wealth Management can offer you with a number of different structures to help you meet this cost. Saving a small amount each month can be an important part of this planning, and we can explore a range of products which could suit your needs. On the other hand if you have a lump sum to invest, we can recommend an appropriate vehicle to grow this sum over the long or medium term.

Unfortunately, saving for private school fees is not an activity that the government provides tax relief for, which seems counter intuitive given that your child will be one less in a classroom in the state sector. However, we can explore whether there are any opportunities in your portfolio to increase the tax efficiency of your investments, to make your money go further.

Around one third of families who use the independent sector have some kind of help with their school fees. Bursaries and scholarships are widely available, particularly if the school you choose is a charity. But these discounts and windfalls cannot be relied on to fund your child’s education, as they can be withdrawn and attract a lot of competition from other families.

It used to be the case that your financial responsibilities as a parent would end on the last day of school. But with university costing so much, children often need assistance in this stage of their lives too. The LV= survey revealed that this is when parental contributions to children peak at €15,850 per year.

Tuition fees and living expenses combine to cripple new graduates with enormous debts which can overshadow your children’s finances for years to come. A recent survey by the Independent showed that the average student who graduates this year will have €23,000 worth of debt.

Guardian Wealth Management has access to certain products which permit withdrawals at regular intervals to assist with costs such as tuition fees. The flexibility afforded could also provide your child with an income while they are at college or university. That way they can concentrate on their studies instead of their part time jobs.

The earlier you start saving, the better, but it does not have to be a burden because with the right advice you will be better prepared for the expense.

Have you a question about this article or need any help with your finances?

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