Planning for your child's education

FRIDAY, JULY 13: You want your children to have the best education possible, yet school and university expenses and fees can be costly.

The money that you spend on your children’s education is one of your largest lifetime expenses.

Starting to save early will enable you and your child to select the best school or university based upon academic, rather than financial considerations.

How much money you need will depend on whether you want your children to go to public or private schools and whether they plan to go to university.

Public schools are a less expensive option, but there are still extras; for example, special textbooks, uniforms and school outings.

These can cost between $300 and $800 each year, depending on the needs of the child.

Private school fees in Bermuda range from $16,000 to $19,000 per annum and tend to increase yearly by six per  cent.

If you choose to send your children to boarding school in the US, Canada or UK, their school fees will increase accordingly.

A 2010 Independent Schools Council (ISC) Annual Census in the UK, revealed that, for pupils at ISC senior boarding schools, the average boarding fee per term, was £7,968.

Fees usually include tuition, most recreational activities, accommodation and food.

They may also include basic laundry and textbooks, but rarely uniforms. ‘Extras’ will often be invoiced for the next term, so be sure to find out what these may include in advance.

Common ‘Extras’ include private music lessons, horse riding, dry cleaning and theatre outings. In addition, you have to include flights, clothing and other incidentals.

For an average U.K. boarding school, the cost: £31,872 for boarding school fees plus £5,000 Extras plus £700 uniforms plus £2,500 flights, which totals over £40,000 annually.

Once the child has finished school, they may choose further education at a college, university or trade school.

If you decide to fund your child’s tertiary education, then you will need to budget for those fees also.

Annual fees at Columbia University in New York, are $56,681 including tuition, room & board, text books and supplies. If your child heads to Dalhousie University in Nova Scotia, Canada, the current annual fees are $17,664 including tuition, room & board, text books and supplies.

Both are excellent and very highly regarded schools, however the fees are very different.

College and trade schools are less expensive options and the required funding will depend on your child’s choice of career path.

Saving plans to fund your children’s education can benefit you.

If you are considering setting up an education fund, make sure that the investments fit in with your long term financial goals.

Here are some points you need to think about:

1. Fees — how much is it going to cost you?
2. Contributions — How much do you need to invest and how often do you need to contribute?
3. Investment options —What investment options are available?
4. Access to funds — What criteria need to be met before you can access your funds?

Answering the above questions can be the hardest part of saving for your child’s education.

Working with a qualified financial planner can help to provide these answers and help you understand how they fit into your overall financial plan.

Carla Seely is a senior wealth manager at AFL Investments.