Have you got a dedicated University funds account? Are you regularly putting money away for your children’s education? I didn’t for Chloe, but I wish someone had told me to do so ten years ago. I won’t be making the same mistake for Dylan and Erin.
Student loans were a thing when I was at University, the maintenance grant was being phased out, but tuition fees were not a thing. As a result, I left with about 5K worth of debt. Today’s students have on average ten times that figure. However, I still want my children to experience university and gain a degree if that is what they want to do.
The tuition fees and living loan should be viewed as a graduate tax in many ways. Martin Lewis did an excellent job of explaining it recently and I am happy and understand how it is paid back. However, what I recently discovered is that for us as middle earners (husband is an assistant headteacher and I blog full time) we are expected to be able to contribute to Chloe’s living costs.
Chloe will get two loans, a tuition fee loan and maintenance loan. The maintenance loan is means tested and due to our family income, we will need to top up. Finding this extra money is going to be a challenge as I haven’t saved for it and we are talking about £250 a month we think. Her accommodation alone is going to cost £150 per week, for a small room with an ensuite. It really is basic but expensive.
I have four years where I can save for Dylan but will need to do this alongside subsidising Chloe! Then I have ten years to save for Erin. Of course, if they then decide not to go to university they can use this money for a car or home deposit. Or I could take myself off on an around the world adventure! For Erin, because I have more time, I am looking at a longer-term investment. This is why I say start early to everyone I talk to now!
The issue is then how to save this money. It needs to be in a place that will grow my investment but be relatively easy for me to manage and understand. As a first-time investor, I feel apprehensive and want to be able to have good communication with my provider and understand the process without too much technical jargon.
I have done my research and a Stocks and Shares ISA is going to be the best plan for me. There are many ISAs available and too much choice can put us off taking action. This is where I have previously stopped, despite knowing I want to take the next step.
Recently, I have been talking to UBS SmartWealth, an online investment service launched by the world’s biggest wealth manager* that helps people to achieve their plans, goals and dreams. Within just 15 minutes, you are guided through the onboarding process from the comfort of your smartphone and will be recommended the right product for your personal circumstances, depending on the amount you wish to invest and your attitude to risk.
Unlike some investment services, the fees and charges for UBS SmartWealth are clear and there are no hidden costs. There is no upfront cost, no transaction fees and no exit fees. Customers can check how much their individual fee might be on the website.
Now is the time to be opening your ISA to make the most of the financial year. Learn from our mistakes and make some clever decisions that will help fund your child’s higher education. Middle earners especially need to plan for this as the assumption is that us parents will have the ability to contribute. Yet for many of us, we just don’t have the money sitting around without some forward planning.
I am committed to putting money away now for the other two because we just don’t know how much more a University education is going to get. However, I still believe that a degree will open doors in the future. Plus, university turns children into adults and acts as that bridge to independence away from the family.
How are you planning to support your child in the future financially? Are you already saving and investing somewhere? Let me know in the comments.
Important Information – As with all investing, the price and value of your investments and income derived from them can go down as well as up. You might not get back the amount you originally invested.
* Scorpio Partnership, 2017
Disclosure: Collaborative post with UBS Smartwealth.