The count down to back to school begins, and likely, depending on the age of your children, they are are loving or hating the idea of going back to school!
It an expensive time for parents with not only the cost of back to school and all that entails namely school books, uniforms, footwear but the start of the school year also signifies the beginning of the many activities, such as swimming, music etc all of which come at a cost.
According to the School Cost Survey 2015 carried out by Barnardos, the cost of primary school is still relatively low at approximately €490 per annum. The total cost for one child in primary school over 8 years amounts to an estimated €3,290.
The cost gets higher as the child moves into secondary school. The average cost of education for a child entering first year is €1,135. The move to secondary school also brings a greater number of additional expenses, such as sports gear, class essentials and school trips. This results in a total estimated cost of €6,810 assuming 6 years in secondary school.
So if as a parent of a primary/secondary school child, you are feeling the squeeze now, as most of us are, how prepared will you be for the expense of third level?
A recent study showed that 59% of parents end up getting into debt to put their children through college. Just when things should become easier financially if anything, perhaps with less childcare costs (depending on sibling ages) and a shorter term on the mortgage, it is a harsh reality that it is then, that many have to opt to borrow again.
So what are the costs involved? All “free-fees” third level institutions will charge a mandatory student contribution of €3,000 per year for 2016/2017. The next major expense is accommodation. As per the DIT, Student Cost of Living Guide 0215/2016 the annual costs for a student living away from home include the following:
|Annual costs for students living away from home|
|Student Contribution Charge||€ 3,000.00|
|Rent (national)||€ 2,925.00|
|Books & Class Materials||€ 666.00|
|Social Life/Miscellaneous||€ 666.00|
|Source: DIT, Student Cost of Living Guide 2015/16|
It would be impossible to fund this from day to day expenditure. As a Financial broker, we cannot stress enough the importance of starting to fund for such expenditure from an early age. Like most things in life, putting things off will inevitably only make things worse! No one needs the stress of trying to fund for such expenses without the means to do so and borrowing really has to be a last resort.
Not everyone can afford to put the Children’s Allowance away but the impact is great, if you can afford to do so as per the below chart;
|Savings fund after 5 years – Starting primary school||Savings Fund after 12 years – Starting Secondary school||Savings fund after 18 years – Starting 3rd Level|
|Regular contributions €140 per month (increasing annually)||
*Source: Zurich Life Assurance Plc.
The above assumes a gross investment return of 3.3% per annum. On encashment, partial encashment, assignment death or on each 8th anniversary of the policy, tax is deducted on gains made. The figures shown allow for deduction of tax (currently 41%). Contribution increases of 2.5% per annum are assumed. An Annual Management Charge of 1.25% and allocation rate of 101% is assumed. A Government Levy of 1% applies.
Regardless of the level you can afford to put away, making a start, however small, is the hardest part. By making a start, you are setting up the savings habit and giving yourself the peace of mind that you are doing what you can to ease the burden in later years.
If you want any information in relation to the above, we would be happy to help. Please contact us on 053 9233640.