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SCHOOL FEES PLANNING
Many parents are faced with dilemmas due to the spiralling costs of giving their children what they believe to be the best start in life. You have already decided that some form of public school, perhaps even a boarding school, is appropriate but should you pay fees out of income, or should you put money aside? Should you use the equity in your property (if there is any) or should you reduce your mortgage so that you can borrow later? How much will be needed for primary, secondary and university fees plus uniforms, trips etc. and will your children still be financially dependent upon you, whilst gaining further qualifications?
For many, the total cost can be as much as buying a house but instead of taking out a 25-year mortgage you are forced to pay over a much shorter period – typically around 17 years if you include primary schools. When funding more than one child, they generally enter and leave education in different years to the others. This makes any sort of calculation mind-bogglingly difficult.
These are the typical questions that today’s ‘New Model’ financial planners answer, with the aid of sophisticated cash flow modelling, to help parents gain a clear vision of how best to meet the costs of education without ruining their own future. This is still quite a new concept to many people but an analogy might help. Think of the financial planner as a financial architect. Your desired financial position is the new home you are trying to build now imagine that an architect shows you a plan for your new home. It’s not quite what you had in mind, so you ask them to make some changes and they show you an updated plan, with the changes you requested.
When planning education fees, the task is similar. The financial planner looks at your income, expenses, assets and liabilities. Assumptions for growth, risk and inflation are factored in. Remember that school fees often rise by over 5% p.a. (Independent Schools Council, 2011). And of course we have seen tuition fees for university students change in a radical way recently.
The plan shows surpluses and shortfalls and also looks at what might happen on the death or disability of a parent, plus the effects on retirement planning and even long-term care, if necessary. You can then request different scenarios, changing assumptions, amounts to invest, timescales etc.
The result is that parents can understand how all their financial aspirations fit together and if they are achievable, before committing to a course of action, or any savings or investments.
The value of investments and income from them may go down. You may not get back the original amount invested.
Tax treatment is based on individual circumstances and may be subject to change in the future.
For many, the total cost can be as much as buying a house but instead of taking out a 25-year mortgage you are forced to pay over a much shorter period – typically around 17 years if you include primary schools. When funding more than one child, they generally enter and leave education in different years to the others. This makes any sort of calculation mind-bogglingly difficult.
These are the typical questions that today’s ‘New Model’ financial planners answer, with the aid of sophisticated cash flow modelling, to help parents gain a clear vision of how best to meet the costs of education without ruining their own future. This is still quite a new concept to many people but an analogy might help. Think of the financial planner as a financial architect. Your desired financial position is the new home you are trying to build now imagine that an architect shows you a plan for your new home. It’s not quite what you had in mind, so you ask them to make some changes and they show you an updated plan, with the changes you requested.
When planning education fees, the task is similar. The financial planner looks at your income, expenses, assets and liabilities. Assumptions for growth, risk and inflation are factored in. Remember that school fees often rise by over 5% p.a. (Independent Schools Council, 2011). And of course we have seen tuition fees for university students change in a radical way recently.
The plan shows surpluses and shortfalls and also looks at what might happen on the death or disability of a parent, plus the effects on retirement planning and even long-term care, if necessary. You can then request different scenarios, changing assumptions, amounts to invest, timescales etc.
The result is that parents can understand how all their financial aspirations fit together and if they are achievable, before committing to a course of action, or any savings or investments.
The value of investments and income from them may go down. You may not get back the original amount invested.
Tax treatment is based on individual circumstances and may be subject to change in the future.
Free school fees planning
CONSULTATION
Speak to an adviser who will assess your objectives, current position, and help you plan a course of action. It’s also an opportunity for you to get to know us before deciding to engage our services. You can ask as many questions as you need. Your first meeting with us where we will discuss the ways in which we might help you is free of charge. Contact us today to book an appointment.
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