Sunday, 18 May 2014

Budgeting For The Cost of Your Child's Education...

This is a sponsored post on behalf of Yes Loans.
There is always so much talk about the cost involved in having a baby. Everyone would agree, children are from the outset, expensive little things and this is never more true than when they first arrive. There's lots of costly equipment to buy: clothing, feeding choices and accessories to consider, toys to buy as well as the crucial expense of nappies and a pram to name a basic few.
But what about the essential costs as your baby grows?
By the time your child hits the age of 3, you will already have spent a decent amount of cash just getting them there. It is around this age when the expenses really begin to climb considerably however and will continue to grow alongside them. To prepare for this you need to plan a financial future to cope with what is to come.

I am asked so often about how I afford to raise my six children. It's a challenge! A challenge made even bigger now that the latest budget has cut life-lines for so many families already struggling. I would be lying if I did not state here that we are very fearful at this point in time, about coping with the strains to come which will hit all Australian households in so many areas of life.

While you can trim many surplus expenses raising children simply by choice, (choosing cloth nappies over disposable, breastfeeding instead of bottle feeding and recycling kids' clothing between siblings for example), one area you cannot avoid paying out in, is in the area of education.
If you are a parent of a baby or very young children, let me tell you now - education will cost you a bucket-load!

My children all attend public schools. I am a great believer in the public education system. Great teachers are made - not paid. (All teachers do deserve to be paid very well considering the exceptional job they do.)
I have been employed previously in one of Melbourne's top private schools and never was this statement more apparent to me. Good teachers are everywhere and I don't believe you need to pay extra for the privilege. (By all means, enjoy it if you can afford it though!)

One of the biggest shocks about the education stage of your child's life will be the revelation of hidden costs which will arise even in the public school system. It is easy to view annual school fees on paper and believe that is 'all you will be up for' plus a 'little' more for extras. It is these extras however, that mount up to huge proportions and can really hit hard if they are not anticipated and accounted for in the form of a solid savings plan.

Some examples of real (public) education expenses we have encountered to date which lie ahead on your child's road to adulthood:

Kindergarten fees: Expect to pay $300-$450 per term in a public kindergarten for a 2 year placement.
Add in costs for excursions and incursions each term. (From a small $5 here and there to $25 for really big events.) Kinder uniforms, (usually optional but highly encouraged), can set you back $50-$100. Annual photographs are typically $100 or more.
Some kindergartens charge additional fees for maintenance which you can retrieve if you are involved in a working bee to improve the centre. Most of us are too busy to participate however and can kiss that $50-$70 good-bye. There are usually application fees too, in the vicinity of $50-$150 to secure your child's place at a kinder which may or may not be credited to your fees.

Primary school: Starting school is a big cost. Annual fees are around $200-$450 depending on your chosen public school. You may pay an excursion levy in there but don't be fooled into thinking you will not have to open your wallet again for the remainder of the year. Many excursions are not covered by the levy and each child's participation will set you back anything from $6 to $25 per outing. Excursions are regular.
Schools have loads of 'fun' days for the kids which have regular gold coin donations. School camps annually are a huge burden of $200-$500 per child. There will often be need to buy many items for school excursions like bathers, sleeping bags, coats and so on. Uniform and school bag costs will be around $300 per child. Annual school photos $30-$50 per child. Canteen and special food days $6 per child.

High school: Huge expenses!
By the time our Daughter walked into public high school on her first day of year seven last year, a whopping $2500 plus had been leeched from our wallets. Initially I made the incorrect assumption that the small $400 annual fee was going to be no issue but blow-out it did!
School books at this stage are a massive $500-$600 per annum. All high school kids require an iPad which costs $650. Uniform costs $400 plus. (A branded school bag alone costs $70!) Bus travel passes are $600 per year. School camps $500-600. Camps become more expensive each year too with greater distances and overseas adventures planned. Next year our daughter must have a whizz-bang $200 calculator! (Her calculator which cost $50 in year 7 is already redundant by this level.)
Furthermore, expect annual school photos priced at $30-$50 per child. Music lessons $25 per 30 minutes. Photocopying costs, locker fees, sick bay fees, extra and additional curricular costs depending on your child's interests - the list of fees is ongoing and painful.

So how do we do it?

Start on baby's birthday: In the early weeks of your child's life, open a trust fund account at your local bank. The account should be in your child's name as well as yours so that you can access the funds when the time comes to use them.
Choose an account that pays regular interest and charges no fees. (For a child under 18 there should be no bank fees anyway but confirm this with your bank.)
Feed money into this account fortnightly, directly from your salary or Family Tax Benefit account. I pay $40 per child into each account. ($80 per child, per month.)
Make sure you can access your children's bank accounts without hassle. Choosing a bank that has a mobile App for example, is highly recommended for convenience.
As each expense arises, I simply log in and transfer what I need to cover each child's expenses into my own account and pay-out from there. This regular system ensures that when 2 camp notices come home at once, I can usually pay both immediately. School fees, payable at the end or beginning of each year, are always available.
Regularly consider how these amounts are working for you.
As a general rule, each year I assess how expensive things have been and usually 'up' my payments $10 per child each fortnight just to try and make ends meet with less pressure.
With the new budget restrictions set to be introduced, we will have to re-assess these payments yet again to shield ourselves from the coming cuts.

Keep a jar of small change: So simple, so effective! Whenever I find gold coins about the house, they go straight into my secret piggy bank. When the regular slips from school come home requesting payments, I always have cash available no matter how tight things are.

Tax time: If you get a decent tax return annually and have a child starting at a new school in the following year, I strongly suggest putting as much of your return money aside for a boost to your funds when it will be most needed.

While my accounting system works for smaller anticipated costs, I know there will be times when these methods will not cover the bigger things to come. Overseas high school trips for example, can cost above $5000 and these we will absolutely not be able to afford under our current arrangement no matter how hard we try to save. For these times, I would consider taking out a personal loan to ensure my child does not miss out on any wonderful life experiences. Yes Loans are a loan provider who offer great solutions for situations such as these.

These are the basics of providing for my 6 kids at this stage of our lives. Like all good budget arrangements, constantly plan and re-arrange until you find a system that works for your family. This one, so far has been a good practice in ours.

Have you anticipated the costs of your child's education?
How do you budget your children's costs?
Were you shocked by the expense of school or kindergarten?

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  1. Great tips! My son had to miss an OS trip this year because bad mumma had spent the money - but he has three to choose from next year (I told him he can only go on one!) so feeling less guilty a State School. Shame on our Govt (both parties) for underfunding the very important public education.

    1. It's terrible about the budget isn't it. Even with the loss of School Kids Bonus families are set to suffer. It will be difficult to afford school costs in the coming years.

  2. This is where the Australian education system bugs me as it is different in every state.
    This is my eldests first year of school, it cost us $40 contribution and $60 classroom supplies plus we had to supply tissues and paper towel plus a few minor things. But every week there has been something, money for raffle tickets, a book fair, cupcake day etc.
    Great post.

    1. Yes Ann, it is something you definitely have to prepare for. There's always something coming home - I just received a notice for $250 for camp in 2 weeks - sigh!

  3. I have a jar of small change, it's amazing how handy it is for dipping in! It seems we are going to have to start saving big time now for the girls education, I had forgotten just how many extras there ARE besides the school fees. Now you mention it, I remember how much of an outlay there was at the start of the year when I'd pick up the books for the year. Eeek!

    1. Love my jar of coins! It is my lifesaver weekly - especially since we are paid a monthly salary which can make budgeting a nightmare.

  4. Some great tips here. I'll have to come back and reread them with Husband. We have five children, and I detest the idea of children being a financial decision, but unfortunately the reality is that they sort of are. We have just hit schooling and oh my the cost! Thankfully we are in the Catholic system and they are forgiving and the fifth child is FREE!!!

    1. Oh 5th child free! Wow that means 2 of mine would go through for nothing! Catholic system at least is not as expensive as private. I know people paying in excess of $20,000 per child per year which is just incredible.

  5. They do OS trips at school now??? I thought that was just for exchange students! I better start saving more if thats what Im gonna be up for later.

    1. Yes Toni - start now - kinder eats most of the savings before they have even got to school!

  6. Great post Jody. It's certainly an issue I worry about with our boys, and we have been putting money away each week since they were both born to cover these kinds of costs. Both my husband and I went to state schools and we have turned out pretty well (in my opinion anyway!), so I don't have an issue with sending our boys down the same path.

    1. Great plan Lauren. I also attended state school and I did loathe my high school terribly. I did okay though and obtained two university qualifications. I think by the sound of it, you turned out okay too! :D

  7. This is a great post Jody and something that definitely needs to be considered. I am very worried about the current budget decision and I can understand how you, with 6 kids, would be even more concerned. We started putting a lump sum away each month from when our son was about 6 months old, it's with a particular group where our money is invested and we can use it when our son is in highschool for whatever we wish..text books, excursions, uniforms or fees. We are sending him to a public primary school just like we both did but are still undecided on high school, but it will likely be private because we have two fabulous ones in walking distance from our house which many of our friends attended.

    1. Thanks Eva.
      The budget is a big concern and I am hoping much of it will be scrapped and watered-down as it is so callous on those that need help the most.
      Glad to hear you have been saving too. I cannot imagine how our kids will fare in the future with increased university fees and mortgages etc. I still haven't paid off my own HECS debt and it was a long time ago now since I was in the workforce. It is particularly difficult for women on account of our role as Mothers.
      A school that is walking distance sounds perfect!

  8. Great post Jody! The hidden costs drive me insane especially now that the twins are in high school. I paid $300 in school fees each and then am hit for another $60 for manual arts for the cost of materials...four months later. Add to that excursions and all adds up. Put money away now if you can :)

    1. Tanya, we also get those high school additional expenses - for electives? Why they cannot just factor them in to the beginning of the year???! You just never know what's coming do you? Trusty jar of coins...:D


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