Ways to ensure the best education for your child

These strategies are written from an Australian perspective however apply to the NZ situation too.

They are directed more so around saving for private school fees however can also apply to Tertiary education fees and as we know a public school education is hardly fully funded by the government these days.

  1. Save early, save often - lots of affordable amounts over time will add up, and you'll benefit from the effects of compound interest. Ideally, start as soon as your child's born. As an example, use any financial gifts on the birth of a child to kickstart the investment

  2. Small but regular contributions are more likely to see goals realised than big deposits made when parents feel they can afford it. Set achievable goals. It can be demotivating aiming to save the whole amount required for a child's education. The aim is mainly to have a nest egg to help absorb education costs, not necessarily pay for the entire education. Breaking the ideal outcome down into manageable chunks can help you stick to your savings plan. An example may be to save two full years' high school fees over the next six years.

  3. Get the markets to do some of the "heavy lifting". Think long term. Invest in growth assets to optimise investment horizon, risk and returns.

  4. Encourage other family members such as grandparents to give birthday and Christmas "education" gifts, spending less on toys for their grandchildren (or nieces and nephews) and instead investing in their future. Instead of buying a $100 toy for a birthday present, spend $50 on the toy and put $50 in the educational fund. The toy may end up in the recycling bin in six months but the $50 deposit will grow to buy a number of text books in 12 years' time.

  5. Look at ways to increase the regular contribution amount each year. For example, pass on any pay rises on an after-tax basis straight into the education fund before it is absorbed into normal expenditure. Invest any windfall gains such as tax returns or bonuses.

  6. Keep an eye on the big picture. The aim is to provide children with the best education possible, to help them achieve their goals in life. Is a private education the best option for your child? A government school education might be just as good. Don't immediately believe private is best. Do the sums to check whether a private education adds up.

  7. Check out specialist savings products on offer from financial service companies, such as Australian Unity and Australian Scholarships Group. Points to check include: potential tax advantages; fees; whether the investment strategy is transparent; investment record; when assets can be withdrawn; and whether there are withdrawal penalties.