Want to keep your kids ahead of the curve? Here are four modern trends that might affect your ability to provide your kids with a good education, and why you should take steps to counter them.
It's logical enough that the more educated a person is, the higher their income-earning potential. Research shows that higher education levels also increases a country's GDP and reduces poverty.
That's not all - statistics show that educated people and their children also tend to be healthier. Discovery Life data shows a reduction of more than 22% in mortality in individuals with a tertiary education, across all ages. This illustrates how education can positively impact people throughout their lives.
With the rise of technology and a global marketplace, the workplace is becoming increasingly competitive - making a good education for your child even more important. But there are a number of trends in modern times that may impact your child's education and your ability to fund it. Here's are some to take into account:
1. More people are starting families at an older age
Many couples are choosing to start having children at an older age. While having children later in life theoretically allows a couple to build up more savings before their children are born, it also means the children might still be financially dependent on them by the time parents reach retirement age
The upshot? Parents may have to work more years, or use retirement savings to pay for their children's studies. This could leave parents financially vulnerable at an older age.
2. The duration of paid education is lengthening
Schooling for children is starting at an earlier age. Formal primary schooling now starts from age five, and sometimes even younger. In many cases, both parents work, and considering that crèche generally starts just after age one, the average child will need funding for 21 years of education.
3. Education costs keep rising
Locally and globally, the costs of education have been rising rapidly. In South Africa, education inflation has outpaced salary growth. From 2010 to 2015 alone, education costs rose by around 50% nationally, which means that education is becoming exponentially more unaffordable relative to salary earned.
As schools move towards e-learning, many children now require a laptop or tablet, not to mention funding for a host of expensive extracurricular activities such as sports, camps and tours. In addition, more school leavers are applying for tertiary institutions, which aren't growing fast enough to accommodate everyone who applies.
To help children achieve good academic results in response to growing competitiveness, many parents are opting for extra tutoring. This can easily come to more than R4 000 a month across subjects.
4. In general, South African parents aren't saving enough
Despite the many benefits of a good education on the one hand, and the challenges of funding and getting admission for tertiary education on the other, up to 56% of South African households do not have financial protection or savings plans for their children's education.
Even more concerning are statistics which show that one in four children's lives will be changed by a parent passing away or becoming ill or disabled during their school years.
But it's not all doom and gloom. Forewarned is forearmed - and by acknowledging these trends and proactively addressing them, parents can start saving more for their kids from an earlier age. Speak to a financial adviser on how you can take measures to protect your child's education to ensure they stay ahead of the curve.
This article is meant for information purposes only and should not be taken as financial advice. For tailored financial advice, please contact your financial adviser. Discovery Life Limited. Registration number 1966/003901/06, is a registered long-term insurer, and an authorised financial services and registered credit provider, NCR Reg No. NCRCP3555. Product rules, terms and conditions apply.
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*subject to the limits set by Discovery Life. Discovery Life Limited. Registration number 1966/003901/06, is a registered long-term insurer, and an authorised financial services and registered credit provider, NCR Reg No. NCRCP3555. Product rules, terms and conditions apply.
We have all heard "50 is the new 40". It may be truer than you think. The world over people are living longer. Although longevity is a positive, financial behaviour combined with other knock-on effects of a longer life have to be considered.
Work is a reason to get up. You earn a regular income and meet people. It does not have to change. Your experience, hobbies and interests can generate extra income while you keep living a full life.