There are significant costs associated with educating your children. These include buying food or clothes, covering the cost of changes to your own working pattern or sending your children to a school.
Historically, education inflation runs at about 3% per year above the inflation figure in Uganda. Therefore, the cost of education is generally increasing at a more rapid pace than our salaries.
The money you spend on your child’s education could be one of your family’s biggest expense.
Starting early is one way you can maximize the amount of savings that is available to you. Even if your child is older, it doesn’t mean that it is too late to start. A small amount every month adds up over time.
Starting to save early will help your children have a high quality learning experience.
Do the calculations
It is also important to work out the calculations early. Estimate how much you will need, based on how old your children are.
Do you want to send them to a private school or a government –aided one? Are saving for their primary, secondary or tertiary education? Or is it a combination off all?
For example, if you send 2 children to a private, which charges an average of sh2m per year for each child, by the time they complete school, you will have spent shs24m on only school fees.
And that is on top of extra costs, such as uniform and trips. Investments, such as savings and fixed deposit accounts, are one way to set aside money for your children’s education.
Parents should consider how accessible the funds are, the interest rates offered and the time.
Different commercial banks have packages for parents desiring to save for their children.
However, saving need not be restricted to a bank account. Cash in the bank is good for a rainy day, but it may not be the most effective vehicle for long –term goals, given that in the current low -interest rate environment, the return on cash barely matches inflation over time.
These are funds that are set aside for children’s education. If you are considering an education fund, you should ensure it fits your long-term financial plan.
Parents or grandparents can use life insurance to fund their children’s grandchildren’s post-secondary education by building up and then tapping into the excess cash value with an insurance policy.
Open an account for them
Finally you can help your children understand the concept of saving by opening an account of their very own in their name. This will help to teach them the value of money and how regularly depositing to an account can grow their savings.
Many parents wonder how much they should save for their children’s education. They also wonder how soon they should get down to the saving. But the answer is simple: save early, earn more. Small savings each year will translate into substantial savings later.