It’s back to school time, so you’re probably acutely aware of the cost of primary and secondary education. But are you prepared for the time when your children start college? Just under half of parents (49%) say they have made no financial preparations to meet the cost of putting their children through third level education. That’s according to Aviva’s Cost of Education Report1, which shows that, on average, parents expect to pay out €5,122 a year to send a child to a third level college or university. If the student has to move away from home to go to college, the expected cost is almost double, at €10,125 a year. A four year degree would cost over €20,000 for each child living at home and over €40,000 for each child living away from home. Of course, with inflation these costs could be a lot higher by the time your child is ready to go to college.
Planning for education is easier said than done, though, particularly when you factor in day-to-day expenses and today’s low bank deposit rates2. But there are some things that you can do to help you focus on a savings plan.
Below, we go through some simple steps that can get you on track:
Create a habit
The first thing is to get into the habit of saving; this can be one of the hardest parts. Putting aside child benefit payments is a good place to begin; if you can’t afford to save all of this then perhaps think of setting a target of a manageable percentage of your monthly household income.
Understand your spending
To help understand what you’re spending your money on, you can look at your bank and credit card statements, there’s also an array of helpful apps that you can use, simply log all of you incomings & outgoings. These will give you a realistic idea of what’s affordable savings-wise.
Evaluate your options
You’ll then need to look at the most appropriate savings and investment options to use, this can depend on how long you have to save before your child or children start college.
Find the right place
When deciding where to open your account, you’ll need to decide how much access to your money is required. Certain savings accounts require a set notice period before withdrawals can be made.
When calculating third-level costs, you should include not just books and fees, but rent, food and transport costs, too.
Help your savings make the grade with Aviva
When it comes to your child’s future, you’d do all you can and more. We get that. Aviva’s Regular Saver aims to allow you to gradually build up the funds necessary to support your children’s third level education. You can save from as little as €100 a month through Regular Saver. Aviva’s Investment Bond gives your built up lump sum the potential to grow over the medium to long-term. You can invest from as little as €10,000 through Investment Bond.
The regular savers... Alice and John...
Let’s say Alice and John have decided to invest €140 a month in Aviva’s Regular Saver account to help pay for their child Annie’s education. If we assume their fund returns 3%, 5% or 7% per year, the following table shows what their return could potentially look like after 18 years excluding the impact of tax. Now that wouldn’t be a bad return for a €4.60 investment a day.
The lump sum investors… Mary and Vincent…
Let’s say they invest €10,000 for their child Alex’s education in Investment Bond. If we assume their fund returns 3%, 5% or 7% per year, the following table shows what their return could potentially look like over different time periods excluding the impact of tax.
To maximise the return potential of your money, why not talk to one of our advisers about our Investment Bond or Regular Saver? You can use our helpful geo locator to help find and contact a financial broker near you. Or to learn more about the education saving and investment options offered by Aviva, simply click here.
1. Source: Aviva Cost of Education Report. For more information on this report please see the media section on www.aviva.ie/group/.
2. Qualifying terms and conditions apply to fixed deposits. The capital and interest earned in a fixed term deposit account are guaranteed (subject to credit risk). When you invest in a deposit account you may qualify for compensation under the Deposit Guarantee Scheme should the bank be unable to meet their obligations to you.
3. Annual fund charges apply and early encashment charges apply on certain Investment Bond product options. For details of the charges that apply to your product option please see either the relevant Summary Details Insert for Investment Bond, or the Regular Saver brochure. The minimum premium on Investment Bond Option D is €20,000 or €25,000 if an income is required. Property investments cannot be sold as easily or quickly as equities or bonds - so, in order to protect the interest of the remaining investors, in some circumstances, encashment of units from funds that invest directly or indirectly in property may be deferred for a period not exceeding six months. For all other funds, encashment of units may be deferred for up to three months.
Aviva Direct Ireland Limited is regulated by the Central Bank of Ireland.