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The birth of your child is arguably the most significant moment of your life. With so many additional expenses attached to having children, the last thing on your mind is saving for further education (something that essentially may not happen for another 20+
There are a whole range of savings and investment accounts available these days meaning it can be tough to know which one is best for you. In order to get the most suitable plan talk to a financial planner; these will help to find you a plan based on your financial situation.
Your next step is to set a goal for the amount you want to save. University education is not cheap, annual tuition fees recently increased to £9000 per year, so this gives you a good starting block to build upon. By setting a realistic but ambitious goal you should never be short of motivation.
It can be tough to know exactly how much you need to save, especially with the cost of university rising at a rate that is much higher than inflation. Currently, experts are saying that in order to see your child completely through university you would have to save £60,000, however realistically anything will help. A great benchmark would be to cover the first year’s tuition fees.
Your next job is to do the maths. Take your target amount and an estimate of the amount of time you have to save (e.g. 18 years). Divide your target amount by the time you have to save to give yourself a fixed monthly amount, for example:
This basically means every month you should aim to deposit £69 into a savings account, any more than this is a bonus.
Currently savings rates are very low however it is certainly worth taking into account the interest that you will accrue on a yearly basis as a result of your savings. On the basis that you were able to save £833 every month, and you had a savings account offering 2%, you’d accrue around £4,000 in interest over the course of the 18 years.
Now that you have set up a savings account and you’re making regular contributions you now make friends and family aware of it. You can then encourage them to make contributions rather than spending large amounts on toys or clothes at Christmas or Birthdays.
Providing you make regular contributions whenever you can and occasionally receive contributions from friends or family, you’ll soon find that you’ve built a solid foundation for your child’s all-important university education.
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