Setting up an education savings plan: 6 best tips
Education is the most important thing a person can have access to. Now, learn the best six tips for you to set up an education savings plan e be prepared for the future!
by Aline Augusto
Education savings plan: building a solid and stable future
An education savings plan is equally important to education access, especially because, for most people, one thing depends on another.
Although education is essential, not everyone can have access to it.
Therefore, preparing yourself and your family for the future is crucial to guarantee a thing that should be a fundamental right.
Unfortunately, not all accessible educational institutions are good enough. So, good education usually means expensive education.
Therefore, building an education savings plan is crucial!
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What is an education savings plan?
An education savings plan considers all costs involving education, including transport, meals, extracurricular lessons, textbooks, tuition, and more.
Traditionally, private schools and universities are expensive. Although you can access cheaper institutions, they can not always provide the best services.
Of course, price is not a certain guarantee of great service, but if you can build a solid education savings plan, the rest does not become a big deal.
However, to build it, you must follow some steps and stick with it from the very beginning; otherwise, you will lose it, and education will become a burden in the future.
Remember, education is the most important thing a person can have access to.
Therefore, a savings plan is as important as education itself because one thing will depend on another.
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6 best tips to build a solid education savings plan
So, there are some simple steps you can follow to make sure you are on the right way to build a stable and worthy savings plan for education.
Take a look at it!
1. Start saving money from the very beginning
It doesn’t matter if you couldn’t start building an education savings plan from the very beginning. For example, your child was born, and nobody thought about a plan for education.
Essentially, it is better to have something in mind rather than nothing.
On the other hand, it is way more effective to start designing a plan when a child is born because you will get plenty of time to save even more.
2. Consider inflation when planning your finances and savings
If you don’t know much about your finances, you must first make sure you can build financial planning to decide how much you will destine to the savings for education.
Then, you will be able to start saving without compromising other bills and plans. Also, it is important to consider inflation.
According to statistics, education costs rise approximately from 8% to 10% each year.
So, it is crucial to understand how inflation impacts your plan and how much you need to consider saving year-on-year.
3. Know statistics
In the same way, it is important to consider inflation when it comes to education; it is even more important to consider all statistics related to it.
For instance, take a look at the cost of education for the next years in South Africa:
- Private primary school: from R255 000 to R365 000;
- Public primary or high school: from R105 000 to R150 000;
- Private high school: from R405 000 to R585 000;
- University: from R180 000 to R255 000.
Those numbers are estimated, but you can build your savings plan for education based on that.
Therefore, knowing the reality of education costs in South Africa, as well as knowing your own reality, will guarantee a stable and strong savings plan.
4. Make sure everyone knows how important education is
Certainly, most people know education is the most important thing a person needs. On the other hand, it is always a good deal to let people know how important education is for you and your family.
So, instead of always getting gifts in the form of toys, for example, you may ask to get funds to contribute to your savings plan.
There is nothing wrong with equally receiving gifts or funds. It is up to you. But you can build an education savings plan faster if you let people know how important education is for you.
5. Select an investment to grow your savings plan
It is time to learn about investments if you are ready to put your plan into practice.
Choosing a good investing account to leave the money for education will contribute to your plans.
In essence, it is best to choose an account that offers great rates at low costs.
Generally, there are two options, as follows:
- Tax-Free Savings Account: as the name says, this type of account is tax-free, which means the money saved in this account grows faster than in a traditional savings account;
- Special education funds and unit trusts: these types of investments are attached to inflation. Also, they are more flexible than other types of investments, in case you need to access the money earlier.
Although both options are worthwhile, it is always essential to talk to a bank and make sure you know your goals and risk tolerance in order to access the best product for you!
6. Make sure your beneficiaries will access your plan
Lastly but equally important, ensure your beneficiaries will access the plan you are building.
If you are a grandparent, you can also guarantee your grandchild a part of the inheritance in your Will for education.
Recommendation: 7 financial tips for a fresh start in 2023
As shown, building an education savings plan is fundamental to guarantee education access since it is not cheap.
But, it is even more important to build solid finances in order to be able to save money for the future. And you can start with it now!
Then, check out the 7 financial tips for a fresh start in 2023, and start building a good financial path right away!
7 financial tips for a fresh start in 2023
Want to start 2023 on the right foot? Then, check out the list of the 7 best financial tips for you to achieve success in finances.
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