When creditors grant a loan they might insert a condition that the loan must be covered by credit life insurance. The question arises whether one cannot rather take out normal life cover instead of credit life cover. There are fundamental differences between the two types of products, which make credit life the preferred option for […]
27 November 2012
Saving for your child’s education is a necessity in life. If you are lucky enough to afford the school fees now bear in mind they will increase year by year.
If school fees continue to increase at a faster rate than your annual salary increases then educating your child is going to take up a larger percentage of your household budget. You need to take into consideration that affording the fees for a junior school now is vastly different from affording those fees of high schools in the future.
At the current increase in school fees of 10 per cent a year:
• In seven years’ time high school fees at a “Model C” school will cost around R35 400 a year; or R216 000 for all five years.
• A relatively inexpensive private school will set you back R540 000.
You need to start saving in order to fund the difference between the school fees and what you can afford from your salary.
There are many appropriate savings products available; however the key is to start early. The earlier you start the more you benefit from compound growth. For example, if you saved R200 a month for seven years you would have contributed R16 800, however if the investment grew at 10 per cent a year then your total return would be R24 800, that means R8000 of your child’s education would be paid by growth.
The best way to start saving is to set up a debit order at the beginning of the month and think of the deduction as compulsory.
Contact DebtBusters for further assistance with debt related enquiries on 0869 99 06 06 or visit our website www.debtbusters.co.za.