In early 2018 I covered the topic of passing on wealth & gifting children during the course of your lifetime. There is an assumption of discretionary spend when it comes to gifting but what about the essential cost of education during you and your child’s lifetime. Despite living in a country where third level education is officially tuition fee free, the reality is that the cost of sending a child through the education system from junior infants to college graduation has been placed at around €45,000.
Bearing in mind the strong standard of the Irish education system, most do not need to incur the cost of school fees. Regardless, primary and secondary school costs add up and if you are sending more than one child, it can be significant. According to a survey by the Irish League of Credit Unions, the average cost of sending a child to primary school was €999 and €1379 for secondary school. Research by Barnardos states that 53% of primary school parents noted an increase in the cost of school books on the previous year and 67% has been asked for a voluntary contribution (marking an increase of 11% on 2017).
Add to this the cost of uniforms, other school supplies, transport, lunches and excursions. Secondary school brings added expenses in the form of grinds and higher costs for books, supplies and uniforms.
When moving on to third level education, costs ramp up dramatically. Most colleges charge what is called the ‘student contribution’ and this can run up to €3000 per year per student. Another key cost is accommodation – with many of the college-centric cities located in rent pressure areas, high rental costs are unavoidable. The average cost of rent for the academic year has been found to be around €4000. According to Zurich’s Cost of Education research, parents and guardians spend an additional €2419 supporting their children on top of fees, accommodation and transport. This would bring the average cost of a college student living away from home to nearly €10,000 per year. Now multiply that by the amount of children you have going through the system at any one time.
Many people work from their savings but many do not have such preparations and reply on loans and credit cards. Unfortunately this time of life may coincide with high mortgage repayments and practice costs so keeping the ship afloat can invite extra pressure.
Putting in place a savings plan is always sound advice but knowing exactly what you need to save is as important to give you peace of mind. If you use the estimate of €40,000 to put a child through college, an estimate of how to get there is as follows:
€137.54 saved per month over 15 years (with assumed growth of 6%) will result in €40,000 saved. Starting when your children are small (and allegedly cheaper!) means that you can use today’s income to support yourself when the really expensive time of life arrives.