To ensure that you are on the right track to achieve a particular goal in life, this goal must be specific, measurable, attainable, realistic and time bound.
On the birth of one’s new child many set the goal to provide a private education for their child but have no plan or direction as to how they will achieve this.
Let’s consider this case, in which parents, Joe and Mary would like to send their child to a private school from preschool to secondary and then fund their tertiary education at the local university. They have researched the tuition costs of a local private school in the community and these are as follows:
Preschool $2,000 p.a. x 1 year
Primary $6,000 p.a. x 7 years
Secondary $8,000 p.a. x 5 years
Tertiary $10,000 p.a. x 4 years
Based on these tuition fees and an assumption of 3% inflation it would cost Joe and Mary in total approximately $190,000, which is exclusive of school uniforms, extra curriculum activities such as sport and items such as a computer, internet costs and stationary items.
Under these assumptions, Joe and Mary would need to as a minimum, save $423 per month ($5,076 p.a.) over a 22 year period from the birth of their child. This is based on the assumption of an annual return received of 7.5% on the investment of these savings and also at the completion of the child’s education the savings have been exhausted.
Or if Joe and Mary had an initial lump sum to invest upon the birth of their child they would be required to invest at least $65,000 at a return of 7.5% to achieve the same outcome.
As illustrated this can be quite a burden on a family’s budget if no forward planning takes place, especially if sending more than the one child to private schooling.
For those parents who are already sending their children to private education, next time you ask them to do some chores and get the usual why should I have to do that, show them this article highlighting the investment you are making for their future.