School open days are now in full swing as the new academic year gets underway. Of course, there are plenty of brilliant state schools where your child would thrive. But could you afford to educate them privately?
At first sight, the answer is no. According to the Independent Schools Council, the average cost of private school fees across all age groups is currently £5,744 a term or £17,232 a year. Ouch.
We can make it look even less achievable by considering the long term. Investment firm Fidelity found that fees are up 3.4% from 2017. If you apply that rate of inflation, it would cost you a staggering £275,928 to put a kid through school from Year 1 to the end of A-levels.
It’s a big number but, if your heart is set on getting Junior to private school, there are ways and means.
First, you have to start saving early. I once met a 25-year old office worker who was saving for his children’s education even though he was single and childless! That’s extreme but, in most cases, you should start putting money away as soon as the child is born if possible.
Bear in mind that your child doesn’t have to go to private school, like St John's in Leatherhead in the photo, for the whole of their academic career. They could do primary in the state system, then private for secondary and maybe back to state school for sixth form, for example, depending on what schools are available locally.
To help with costs, you could ask grandparents or other relatives to contribute. Current rules mean that anyone can give gifts of up to £3,000 a year free of inheritance tax liabilities. If larger amounts are gifted, the donor needs to stay alive for seven years afterwards for IHT to be avoided.
In terms of unknowns, many private schools have bursaries or scholarships to help with fees. If Junior turns out to be a potential Olympian or Mozart, they might benefit. And hopefully your own income may increase as time goes on through promotions and so on.
As you’re saving over the long term and want the money to work as hard as possible, you should consider investing in shares rather than cash. You should also take advantage of savings tax perks by keeping the investment inside an Individual Savings Account (Isa). See our SMM guides to it all here.
Once you’ve figured out your likely total, you can work out how much you need to save monthly by using a savings calculator such as this one from the Money Advice Service. I figured out that it would take me 13 years and seven months to save £100,000 if I put away £500 per month. That’s on a conservative 3% growth estimate. Hmm, lucky I’m not planning on extending the family.