Related Posts

Have you prepared emotionally for retirement?

Retirement planning

January 20th 2021

£1.9 billion gifted to younger generations during the pandemic


January 20th 2021

Beware of pension trap when accessing your pension before retirement


January 20th 2021

School fee rise outpaces inflation. It’s more important than ever to start saving early


School fees are rising. If you plan to send your child to a private school, calculating the potential expenses and creating a saving plan early can make all the difference.

Inflation has been making the headlines after the cost of living increased by 5.5% in the 12 months to January 2022, according to the Office for National Statistics, but a report in the Times suggests school fees are surpassing this. After a small increase in fees in 2020 of 1.1%, for the current school year, they have increased by as much as 6.5%.

In the UK, around 1 in 20 school children are privately educated, with the majority of these attending day school. A report from the Independent School Council (ISC) found that the average day fee for each school term is £5,056, or £15,191 for each academic year. Boarding school fees are typically more than twice those of day school fees.

So, putting a child through private education until they’re 18 could cost the best part of £200,000. If private education is something you’re thinking about, creating a savings plan early makes sense.

How to build up an education fund for your child

To make education part of your financial plan, the first step is to calculate how much you will need annually and in total. While the ISC report provides an average, keep in mind that the cost for each school term varies a lot between regions and schools. You should also consider how inflation will affect the cost of your child’s education.

Once you understand how much school fees will cost, it’s time to make it part of your wider financial plan. This could include incorporating the fees into your annual budget, setting up a savings plan, or putting a lump sum aside.

One of the things you need to consider is whether to save or invest. In some cases, a hybrid approach can make sense.

Saving has the advantage of keeping your money secure. However, as the interest rate is likely to be lower than inflation, the value of your savings could reduce in real terms.

In contrast, investing can help your education fund to grow, but it will be exposed to investment risk. As a general rule, you should only invest with a long-term goal that’s a minimum of five years away.

If you’re setting up an education fund, you will likely need to access some of the money in the short term, but some of it may be earmarked for expenses more than a decade away. As a result, holding part of it in a savings account while the rest is invested can help you balance short- and long-term needs.

We can help you make your family’s education part of your financial plan.

The average university student leaves education with more than £45,000 of debt

In addition to covering school fees until your child completes their compulsory education, you may also want to think about university.

According to the ISC report, the majority of privately educated children will choose to go to university. Just 2.2% of pupils went straight into employment and 1.1% choose further training, such as apprenticeships. So, while university can seem like a long way off, thinking about it now can help create long-term security.

UK students can take out a student loan to cover the costs of going to university, including living costs, which they don’t have to pay back until they earn above a certain income. According to the Guardian, the average student that graduated in 2020 had £45,060 of debt.

Setting up a fund that could be used to pay for university or other milestones as your child reaches adulthood can provide them with more freedom and reduce financial pressure.

As with school fees, thinking about whether to save or invest to reach your goal is important.

If you’d like to discuss what steps you can take to create a fund for your child, please contact us.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

What our clients say

I would like to thank EBS and their staff for providing an excellent service, making the minefield of my various pensions seem like an easy task and for keeping me updated on the progress. I would not hesitate in recommending them to anyone looking for pension advice.

Trust and expertise were my key needs for re-establishing my financial portfolio following a divorce. The replacement life cover and complete evaluation of my pension goals were perfectly designed and implemented to suit my changed circumstances. Well done EBS!

Honest and comprehensive financial advice given with no pressure to buy any products. Reasonable fees for advice and ongoing costs. Very happy with the services given.

Many thanks for taking so much time to meet and discuss our retirement funding plans with us yesterday. The detail of the analysis was very impressive, and you and your staff are to be congratulated on a very professional job.

Our grateful acknowledgements are due for the advice and support proffered by the EBS team and everyone we met at entry, all very courteous, personable and a pleasure to meet.

The ‘Portfolio Report’ that EBS offers has made understanding and managing the family budget so much simpler. It gives a detailed summary and breakdown of our overall financial position, which is so helpful when cross-referencing it.

Thank you for your very comprehensive letter and schedules.... I must reiterate my thanks for all you have done for me.

Many thanks indeed to you and EBS for doing your very best for me. I know I am in safe hands with you. It really is very much appreciated!

I would also like to thank you all for the work in getting this organised for us. I know it has not been easy but I really appreciate it all.

FR, Lanark

JS, Glasgow

IM, Dunbartonshire

RS, Biggar

BW, Skelmorie

MP, Glasgow

BA, Salisbury

MR, Glasgow

NM, Glasgow

Get in touch

    How would you like to be contacted?

    You voluntarily choose to provide personal details to us via this website. Personal information will be treated as confidential by us and held in accordance with the Data Protection Act 2018. You agree that such personal information may be used to provide you with details of services and products in writing, by email or by telephone.