Many people are of the belief that private schooling will provide children with better education, leading to more opportunities post VCE. These thoughts stem from the private schooling sector having access to more resources to help children excel in various specialty areas such as sporting, musical or academic options as well as nurturing and being more responsive to children to achieve a higher result overall.
Private school fees are increasing year to year beyond inflation. Not to mention the added cost of uniforms, school books, computers, excursions and tuition fees. The average cost of 1 child attending an mid-tier private school for secondary education is roughly $500,000 post tax. With fees increasing by roughly 7% per annum, $500,000 in today’s dollars will compound to roughly $750,000 for the 6 years of secondary education. The offering of scholarships also opens doors for many parents and children who cannot quite afford these hefty school fees.
Irrespective of the costs associated to private schooling, many parents make significant financial sacrifices so that they provide the best opportunities for their children via private education. Even if it means extending your working life. Luckily, the nature of medical, dental and health professionals is to slowly transition to retirement overtime. This is done by slowly reducing working hours as you progress with age to allow you to work for longer period of time to continue doing what you do best and keeping your mind active.
Creating a personal living budget
If private schooling is on your agenda, a detailed personal living budget will assist in prioritizing all living expenses and seeing what you may need to sacrifice along the way. Whether it be adjusting your entertainment or family holiday expense or other variable costs along the way.
Cash flow and capital financial planning
Once you know how much you need to live whilst paying for school fees, it’s a matter of formulating a financial plan focusing on cash flow and capital planning to factor in these high cost years and how it will impact other financial decisions in the process. Avoiding investment savings plans such as high cost, % fee based Education Funds and focusing on a simpler, low cost, long term investment can be considered. Particularly if you’re still in the early stages of planning for secondary private school fees for your newborn!
Do you need a financial plan?
We recommend arranging a meeting with a Director/Financial Adviser should you wish to discuss your financial planning needs to accommodate future private school fees.