My child is staring college in a few years and I am worried about the costs.
How much do I need and what are my options?
College costs are rising, so start saving now
The cost of putting a child through college is increasing. If you have young children, you need to take action now or as soon as possible.
This was very much on the minds of the parents of students during this years Leaving Cert. Yet parents of young children should also be preparing.
It currently costs about €11,766 a year to put a child through college — if he or she is living away from home. As college undergraduate courses typically run for four years, the total bill for putting a child through third-level education could easily come to €47,064 today.
However, once inflation is taken into account, the cost of college could climb to €13,640 a year in 5 years’ time, €15,813 a year in 10 years’ time and by 2034 (the year that today’s three-year-olds can expect to be starting college) the cost of four years’ college education may rise to €73,324.
Provided you choose your investment wisely, it should be easier to save for this bill with an investment product, rather than a deposit account. Most investment experts will advise you to steer clear of deposit accounts if you have 15 years to save up for something — and instead, to choose an investment product with a moderate amount of risk, which is likely to deliver reasonable annual returns. The interest paid on deposit accounts today is at record lows.
A good life-assurance savings plan should beat the returns you would make on deposit — as long as you’re investing for more than five years. A good example would be the Zurich Life’s Easy Access Savings Plan. With the Easy Access Savings plan, you can choose where your money is invested (within the suite of funds offered by Zurich) — and how much risk you would like to take on. You can save as little as €75 a month and there are no exit penalties should you need to withdraw money from it.
Be careful which investment product you choose: pour your savings into the wrong investment and you could lose much, if not all, of it by the time your child is ready for college. Watch out for charges, too — you need a product which will deliver a reasonable return once tax and investment charges have been paid. Don’t invest in a highly risky product.
It never too late to start saving but Parents who have left it until the last minute to prepare for college bills could take out a personal loan to cover the costs — as long as they can afford the monthly repayments. It will cost you much more to borrow money for your child’s education than to save up for it in advance, so avoid loans if you can.
Contact Philip in Southeast Financial services for further details, a quick quote or to start you savings plan today.
This article aims to give information, not advice. Always do your own research and/or seek out advice from a Financial Broker before acting on anything contained in this article.