When you’ve got a young child, education expenses are always on your mind. To give your children the greatest chance of success, you want to ensure that you can provide the very best schooling possible. Often this means planning ahead, sometimes even before your first child is born. Here are 4 ways to make sure that you are prepared for your kids’ education expenses.
Open Your Own Education Savings Account
If you’re confident in your ability to budget efficiently, then you can simply open an account with your bank for your kids’ education expenses. You will want it to earn the highest interest rate possible, and have penalties in place for any withdrawals. This will help your money grow even quicker, and the fees will discourage you from making any withdrawals before your kids are ready to go to school.
The key for this plan to work is to have a really good budget. If you’d like more information or budgeting assistance, contact a professional agency such as Fox Symes. In addition to helping you with a budget, they can provide advice on consolidating your debts so that you can start maximising your savings.
Holding Funds in Trust
Some parents are tempted to put their investments towards education in their child’s name, but this can have several negative impacts. As soon as the income goes above the tax-free threshold, it will be taxed at a very high rate. When you hold the savings for education expenses in trust, you will incur tax at your own rate instead.
Another benefit is that you can choose where the money goes, rather than your kids spending it on something else once they reach 18! It will cause a significant rift in the family if your hard-earned money goes towards an overseas holiday or new car when it was intended for a University degree.
Education Saving Plans
For parents who might need a little more incentive to save, you can consider investing in an Education Savings Plan. This option allows you to make regular contributions, and enjoy the safety of knowing that that the money can only be used for education. You will need to carefully research the plans that are available, as some can have restrictive terms and conditions particularly in regards to withdrawals and accessing tax refunds on your investment.
Using Your Mortgage
If you have paid most of your mortgage off and have a low cost re-draw facility, you can use this to help pay for your kids’ education expenses. This could be an option if you have worked hard with your repayments and can now access a significant amount of money through redrawing on your mortgage.
Preparation is the key to ensuring that you can afford your child’s education expenses. Before you can work on creating a significant investment, you need to make sure your finances are in order. For the very best in budgeting assistance and debt consolidation advice, consider enlisting the services of a professional provider such as Fox Symes. With their help, you can create a simple and consistent saving schedule to eliminate your debt and start saving for your children’s future!
Written by Emma Jane