Planning For Your Child’s Education: What You Need To Know

  • February 3, 2022
  • malikshehu
  • 5 min read

Children are a blessing, but children are also quite expensive – and a significant portion of those expenses goes toward school fees. Education is one of the most crucial investments you can make for your child, as a good school gives your child the skills and social capital they need to succeed later in life. This article will help you prepare for your child’s education costs by outlining 4 key elements to consider.

4 key elements to consider during education planning

The first question to ask is, “How many kids do I have (or want to have)?” This is important because family planning feeds into financial planning. Below are 4 key elements to consider when planning your child’s academic future.

#1. Age 

The first step in planning your child’s education is knowing how old they will be when they start school – whether that’s primary school, high school, or college. If you’re planning for the college education of children aged 2 and 8, for example, they’ll have 16 and 10 years respectively till they turn 18 and start college.

A child’s age is a starting point for education planning.

#2 School

Where your child goes to school will determine the social and cultural capital they acquire, i.e., their knowledge, behavior, and networks. Good schools that confer all of these tend to cost more.

There are two types of schools: public and private schools. Private schools are more expensive than public schools, because public schools are financially backed by the government through taxes (and so can afford to charge lower fees) while private schools draw revenue directly from their student body. As a parent, your choice of school will depend on your budget and the quality of education you want your child to receive.

A good school helps with the social and intellectual development of a child.

You can also alternate the type of school your child attends depending on which academic stage they’re in. For instance, if you want to take them abroad to an international college, you might start them off with public schools for primary and high school so you can save and invest for a private college education. Alternatively, you take them to private schools for primary and high school and switch them over to a public college. Keep in mind that the higher up their academic journey they go, the more they’ll want a say in their choice of schools – so start saving up the funds to allow them to pursue their dreams. 

#3 Fees

Next, gather information about the current school fees for the schools you want to send your child to. Let’s say your daughter is 6 years old and starting school today. If she is to later attend Stanford University, you’d need to pay approximately $80,000 per year for tuition, accommodation, books, and a personal allowance. This means that a 4-year degree will cost you approximately $320,000 (assuming no fee increases throughout her tenure). 

Do you have $320,000 right now? If not, you’ve got some planning and saving up to do.

You have to cater to the rising cost of school fees.

#4 Inflation 

You now know what it will cost for your daughter to attend Stanford today – but at just 6 years old, it’ll be a while before the question of college comes up. You still have to project how much a Stanford education will cost in 12 years when she starts college.

School fees inflation calculator

On average, inflation for private tuition fees has risen 5% per annum since 2001. We can incorporate inflation into the present cost of education using the formula below:

Future fees = Current fees * (1 + interest rate) ^ (years)

Plugging Stanford’s tuition figures into the above formula gives us:

Future fees = $320,000 * (1.05) ^ 12 = $574,674 (The total cost of a Stanford college education 12 years from now).

Did your stomach just tighten at that number? Well, that’s because it’s Stanford. The college you end up taking your daughter to might cost considerably less.

Starting your child’s education planning early gives them the choice to pursue what they love.

Start thinking ahead

There are a lot of milestones in a child’s life. Some, like birthdays, are short-term and can be paid for with existing savings. Others, like starting primary school, are medium-term and can be paid for by investing in education plans with specific investment companies like RL360. For long-term plans like college or graduate school, diligent planning years in advance will avoid you going into debt or scrambling for money when the time comes.

With savvy planning, your child can also get a full or partial sponsorship to attend college, which frees you up to save or invest your money in other things. Having a two-income household can also ease the burden of education costs.

Your next step is to assess your budget and discretionary income to see how much you can comfortably put toward your child’s education. If you need help, speak to a certified financial advisor to help you plan the way forward.