Saving for Children's Education in Perth
One of the major decisions parents make when having children is which school to send them to. Of all the options available, some have major financial implications.
There are age-old arguments as to which school is best. But really, it just matters that your child is happy at school and that they can reach their potential.
Let’s look at some of the different schooling options.
- Local public school.
- Academically select or specialist program school e.g. Perth Modern or John Curtin College of the Arts.
- Faith-based schools including Catholic, Anglican or Uniting Church. Examples include Aquinas, Iona, Santa Maria, All Saints or St Stephens.
- Private Independent schools e.g. Methodist Ladies College, Christ Church Grammar.
As a guide to the costs associated with each, The Australian Scholarships Group Friendly Society Ltd (ASG) organisation regularly publishes their “Planning for Education Index”. This incorporates a range of variables including school fees, transport, uniforms and excursions, however does not include boarding fees which can as much as double the cost for our regional clients.
3 WAYS TO PAY FOR YOUR CHILDREN'S EDUCATION COSTS
Draw from annual
Borrowing against the equity
in your property
Saving up in advance
4 OPTIONS FOR SAVING IN ADVANCE FOR EDUCATION COSTS
Save money on a regular basis into a high-interest savings account or a loan offset account
Shares or managed funds may be a better option if the funds are going to be invested for a minimum time frame of 5 years
Insurance bonds can offer a tax advantage, depending on the taxable earnings of one or both parents
Education savings plans offer tax advantages and if you use the earnings to pay for education costs, any tax paid is refunded to you.
OTHER EDUCATION PLANNING CONSIDERATIONS WE ADDRESS WITH CLIENTS:
- Applying for a scholarship. There are a lot of schools that offer scholarships to attract talented students to their school. Testing is done early in the year and this helps to reduce the cost of educating your child at that school.
- The potential to buy a home in an area that has access to a good local public school. Residential areas that are within a specific school catchment zone typically do have higher prices. The rationale is that it may be less expensive overall to buy a higher priced home than to pay for a private education. Senior Lecturer in Economics, Finance and Property at Curtin University Mr J-Han Ho conducted research on this as part of his PhD. He concluded that families could save up to $200,000 per child by buying a house in the catchment zone of a highly-rated public school.
- Government financial support is available for regional families to help meet the cost of children living away from home for their schooling. This is subject to a parental means test and more information is available on the Department of Human Services website.
- For our regional clients, their children are now leaving home one year earlier, sometimes when they are 11 years old. It is hard for every parent to see their child leave home but especially so for regional parents when the children are still so young. For this reason, many parents consider buying or renting a home in the location where their children attend school, so the children can still have the comforts of home and the support of at least one parent. This typically results in the working spouse commuting between the family home and the second home where the children are being schooled.
Get in front of Education Planning with HPH Solutions
Whatever your plans for the education of your children, there are many options to consider. Planning for it will only broaden your options for providing the family and school environment that best supports your child’s development and well being.. Book an appointment with us by calling (08) 9200 3123.
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We appreciate the book’s ability to increase the financial literacy of all who read it and relieve people of the pressure of personal debt.
While there are no hard and fast rules, there are some rules of thumb that apply, $150,000 in household income being one.
Emma has more than 20 years’ experience as a financial adviser including 7 years with Plan B Financial Services and 14 years with Macquarie Private Wealth