SAVING FOR OUR CHILD’S FUTURE EDUCATION NEEDS WITH SUPPORT FROM THE SANLAM GOAL MANAGER
The current economic climate is anything but stable. Growing up, my mother raised us, and my dad provided for us financially. That being said, education needs were not saved for, but you went where it was affordable. As a result, your choices were limited and you ended up taking a course just to say you did something post matric. Will it get your dream job? Maybe, but often you end up in an initial career path you didn’t aspire to have. #AD
According to a recent survey commissioned by Sanlam, 91% of 1845 recently polled South Africans, considered education key to their future success. 77% believed a qualification made you more employable and 92% were of the opinion that their children would need more than one qualification to ensure gainful employment.
Isn’t that the reality of so many families though? The demands of life, even with the luxury of two parents working today, cos let’s get real life is that expensive, not many save for the future educational needs of their kids. There always seems to be something more pressing that needs addressing, placing tertiary education future costs onto the backburner to be addressed “when we get there”.
Furthermore, the belief among the surveyed participants that a qualification improves employment prospects is backed up by available date. Recently, South Africa’s number of unemployed individuals exceeded 10 million for the first time! Let that sink in for a bit, 10 million people unemployed! Besides the obvious economic hardships and pressure this places on a family, consider the mental health burden that goes along with it. Not only are we now trying to plug holes to make sure we have food on the table but we also have the mental desperation of loved ones to deal with.
In our instance, we’re trying to be different to our parents in terms of being ready for our son’s future educational needs, as are many families, however, just because we have an educational savings account that we have a monthly debit order funding it, or an educational policy with a reliable financial institution does it mean that you will have enough for when the time comes to ship your child off to varsity? The realistic answer is NO! Unless you’re making sure that your savings and the educational policy are keeping up with inflation and future educational costs, we’re probably not going to be any different from our parents after all. You may have enough for year 1 of tertiary and then your child must secure a bursary or take out a loan if they plan to finish the degree or diploma they started. Furthermore, a 2019 Statistics South Africa report based on 2017 data found that just 33.8% of young people aged between 18 to 24 were attending educational institutions and only 11.6% were in tertiary education institutes. Over half the youth said they couldn’t afford tuition. Whilst the recent “Fees Must Fall” movement was a catalyst for the introduction of free education for first-year students, this still leaves the challenge of finding funding to complete studies.
Darren and I are doing our best to make sure that we have savings in place for when our son finishes his matric and embarks on one of his many dreams today, of becoming a pilot or race car driver or even a career in Advertising. To help us make sure our savings are on track we met with a Sanlam Financial Advisor who introduced us to the Sanlam Goal Manager. It’s an incredible savings tool that assists you as a parent track your savings based on the potential cost of the tertiary education needs of your child. Brilliant tool in our opinion.
HOW DOES THE SANLAM GOAL MANAGER ASSIST YOU?
- With support from your Financial Planner, it will help you calculate the cost of your child’s future education needs.
- Your Financial Planner will also work out an affordable savings plan
- During your annual review with your Financial Planner, the Sanlam Goal Manager will be part of the discussion too, as you review your goal(s) sharing the latest cost of education figures and informing you if you’re still on track to reaching your goal
- Life happens, and I love that with the Sanlam Goal Manager we’re able to adjust our goal amount AND monthly payments if there’s a need and you will be able to see the impact it has on the end goal.
WHAT ARE THE BENEFITS FOR YOU AS A PARENT?
- You are able to keep a record of your savings
- Automatically adjust your monthly payments
- At all times you’re able to track how you’re progressing towards your goal without any surprises along the way
When we sat with Adel our Sanlam Financial Advisor and went through the Goal Manager, we felt overwhelmed at the realization that we were nowhere near being ready to reach the financial demand of his current choice career of becoming a pilot one day. I KNOW we’re not alone either. We encourage you to speak to a Sanlam Financial Planner as soon as possible to make sure you’re ready financially for when the time comes but don’t leave it too late as the following example illustrates;
According to StatsSA, tertiary education costs increased by 6.2% whilst secondary education costs increased by 6.8% in 2019; both higher than general inflation. According to data collected by Sanlam, a university degree costs approximately R48 – R52K p.a. on average.
Based on the illustration above, parents with a child starting primary school need to contribute approximately R20K p.a. in order to save the nearly R600K required for an average four-year degree in 12 years time. Starting later means you need to save more every month. The required monthly savings amount increases to nearly R50K p.a. if you wait until your child reaches high school.
Sanlam’s research showed that 67% of all participants are saving under R20K for education a year. 86% of people with household incomes of under R10K a month save under R20K per annum for education. In the R10K to R30K per month income bracket, 63% of people save under R20K p.a. and in the +R30K per month income bracket, this drops to 40%.
Despite all the financial pressures that families have to endure, you cannot put off investing in your child’s future now. Deciding on a structured and managed program with a Sanlam Financial advisor is a route you should consider without delay.