Every parent wants to give their child the best start in life, and for many, that includes a quality education. In Australia, the cost of education can vary significantly depending on the type of school you choose. While public schools are generally low-cost, many families opt for private schooling due to the academic and extracurricular advantages it offers.
However, private school fees can be a significant financial commitment. The good news is that with a solid investment plan in place, you can start saving early and ease the financial pressure over time.
Understanding the Cost of Private Schooling
Private school fees can vary based on location, school reputation and the year level of your child. On average, private primary school tuition in Australia ranges from $4,000 to $15,000 per year, while high school can range from $10,000 to over $30,000 annually. This doesn’t include uniforms, textbooks, excursions, and extracurricular activities, which can add thousands more to the total yearly expense.
Planning ahead and understanding these costs is the first step toward building an effective savings strategy. The sooner you begin, the more time your savings and investments have to grow.
Why Start Early?
Starting early means you can take advantage of compound interest, which allows your savings to grow faster over time. Even small, regular contributions can make a big difference if started early. By beginning when your child is a baby—or even before they’re born—you spread out the financial burden over many years, which can make private school fees much more manageable.
Early planning also gives you flexibility. With time on your side, you can choose investment options that suit your risk tolerance and financial goals, rather than having to rely solely on short-term savings when school bills begin.
Set Clear Goals and Create a Budget
Before diving into savings options, it’s important to define your education goals. Consider the following:
- Will you be funding primary, secondary or both?
- Are you aiming for a high-fee independent school or a mid-range private institution?
- Will you have more than one child to support?
Once you have a rough estimate of your total target, break it down by year and create a savings timeline. Then, analyse your household budget to determine how much you can comfortably set aside each month. Treat this like any other essential expense to prioritise it.
Choose the Right Savings or Investment Option
There are various ways to save for private school fees, each with its pros and cons. Some of the most popular options include:
1. High-Interest Savings Accounts
A simple and low-risk way to start saving. While interest rates may be modest, your funds are secure and easily accessible. These accounts work best for short-term goals or as a safe place to store funds temporarily.
2. Term Deposits
Offer fixed interest returns over a set period. Term deposits provide more competitive rates than regular savings accounts and are suitable if you want to avoid the temptation to dip into your savings.
3. Managed Funds or ETFs
For longer-term savings, investing in a diversified portfolio through managed funds or exchange-traded funds (ETFs) can provide higher returns than traditional savings accounts. These come with more risk, but over a 10–15 year period, they can significantly grow your education fund.
4. Education Bonds
Specially designed for education savings, these investment vehicles offer tax advantages and flexibility. Some education bonds allow you to assign a beneficiary (your child) and make tax-free withdrawals for eligible education expenses.
Use Government Benefits and Tax Strategies
If you are within a certain level of income, you can receive rebates or tax benefits from the government that are meant to support your savings. Support for private school fees is not possible, but by investing in your name when your income is looked after by a family member, you could pay less tax on your earnings.
You could help your child by setting up an offset account on your mortgage as a family investment. It helps you pay your loan interest less and keep savings for better use in the future.
Review and Adjust Regularly
Reviewing your strategy every year is important when creating a long-term financial plan. Situations in life can shift which may also cause your financial goals to change. Check your budget again, watch your efforts to build savings and modify the way you invest as needed. If you think you are spending too much, look for ways to spend less on things you don’t need or look for higher return investments that are also balanced.
Talk to a Financial Adviser
When you’re not sure how to start or organize your plan, a financial adviser can give you useful insights. They can create a financial plan that matches your earnings, comfort with risks and time to save. Advisers may help you understand the effects of compounding, investment earnings and changes in the market.
You can handle private school fees with ease if you prepare early. If you make a detailed spending plan and keep saving regularly, you’ll be ready financially when your child starts school. You should begin early, know exactly what you want and make use of helpful financial services to enhance your finances over the years.
Your child’s education deserves to be one of your biggest investments. Being prepared and strict will allow you to have children and protect your finances at the same time.
