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Four ways to fund your children’s education


Children’s education is a hot topic with surveys showing that a child born in 2016 can cost up to $552,000 in private education costs.  While public and Catholic schools are more affordable options, the costs of educating a child can still be challenging for families.  But thankfully there is a gap between finding out you’re expecting a child to when you need to start paying for education, so you have time to plan. Below are four sources of funding to help you give your child the best start in life.

Source 1 – Income

If you have a household income that is high enough to pay all the family expenses as well as school fees, you’re in a good position. It’s always a good idea to create a budget to understand where your money is going. It will show you where you are potentially wasting money and how you can make improvements.  Then get into the habit of transferring money for education into a separate account, such as a savings or offset account, as soon as you can.  The early years fly by so quickly and this will help ease the shock once your child hits school age.  As a bonus, the money saved can either be put towards school fees, reduce your mortgage or fund a holiday before your little one starts school.

Source 2 – Savings

Savings is a solid source of education funding and could be in a bank account, an investment account or in your home loan.  The larger the pool of savings, the easier it will be to pay for education costs. It can be especially useful if your income does not cover the total cost of the education as you can use a combination of both savings and income to get through the more expensive years.

Source 3 – Investments

With foresight and planning, it’s possible to build an investment portfolio that will fund your child’s education.  A blue chip property or share portfolio invested when your child is born will have ample time to grow by the time your child reaches Year 7, enabling you to sell to fund the remaining education expenses. Depending on your financial situation, your risk for appetite and how much time you have, you may also be able to borrow money to invest, potentially magnifying the outcome.

Source 4 – Debt

This is the least attractive of all the options, however for some education is important enough to warrant it. Should you have access to equity in property, it’s possible to borrow from that to raise funds for your child’s education. If you are borrowing to fund education, it’s highly unlikely that you’ll be reducing your debt, so be careful that you’ll be able to afford to pay it off in the future. Keep in mind that it’s not just the cost of the education that you’ll need to pay back, but also the cost of borrowing or interest.

The right combination of the above sources of funding will make it a lot easier to cover your child’s education, and leave you in a position where you can still maintain your lifestyle and stay on track for retirement.  The key is to plan and to start as early as possible.


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Our response to limit the spread of COVID-19

  • As COVID-19 continues to spread, we would like to take a moment to let you know what Financial Spectrum is doing to respond.

    While we haven’t been directly affected with any confirmed cases, we are taking all reasonable precautions to remain safe.Our priorities are:

    1. Keep our staff and clients safe
    2. Stay fully operational in our service delivery and continuing to manage your financial affairs
    3. Play our part in minimising the impact on our community against the spread of COVID-19

    Financial Spectrum has the technology, infrastructure and systems to continue business as usual remotely and our staff will now be working from home.

  • You should notice no change to our service, with the exception that we are encouraging our clients to meet via video call, rather than face to face, unless requested. We will be contacting all clients with meetings booked over the next two weeks with instructions for a video call.This is an evolving situation and we will continue to monitor developments. We will keep you informed of any material changes to our approach.

    These are unprecedented times and we understand that many of you will be feeling unsettled about your finances. We would like to assure you that we are open for business and are here to help you. If you don’t have a meeting booked but would like one, or if you have questions, please contact us at info@financialspectrum.com.au or on
    02 8238 0888

Brenton Tong

Managing Director

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