Avoid These Education Planning Mistakes

Avoid These Education Planning Mistakes

Schooling and post-secondary studies loom a long way in the distance when a baby arrives, but it is at this time that parents and grandparents need to be thinking about education according to the Australian Scholarships Group (ASG). ASG reveals the most common education planning mistakes and makes recommendations for avoiding them.

Mistake 1 – Starting Too Late
Amid the joys and chaos a new baby brings to a family, parents often tend to put off planning for things that seem in the distant future. ASG's General Manager Development, and mum to two grown-up children, Ms Frida Kordovoulos says she can understand the inclination having experienced it herself.
< 'New parents really have their hands full trying to adapt to the host of changes involved in meeting the needs of their new baby and revelling in the delights of their wondrous newborn.
'You're really focused on the present and sometimes just trying to cope. Their future needs seem a bit overwhelming so there's an inclination to think, -I'll worry about that later'," Frida explains.

This is the biggest mistake parents can make in relation to realising their education dreams for their newborn according to ASG.

'ASG encourages parents and grandparents to establish an education benefits program as soon as possible so they can gain the powerful benefits of time through compounding, which can effectively multiply savings effortlessly," Frida says.

ASG's Recommended Remedy: Start saving for education sooner rather than later.

Mistake 2 – No Planning
Although parents and grandparents embrace planning for many aspects of their life, from holidays to retirement, many still haven't grasped the importance of planning for their children's or grandchildren's education.

'Failing to plan for education can definitely limit your choices or place your family under immense pressure to fund your education choices from your salary or earnings.
'We've seen the results of this mistake in the most recent financial climate and it can be really devastating to a family's wellbeing," Frida added.
ASG's Recommended Remedy: Plan for your education choices and set up a discipline to put aside a portion of your income regularly.

Mistake 3 – Believing Paying More Equals a Better School
According to the Australian Bureau of Statistics, the costs of education have risen at more than double the rate of inflation over the past 20 years, pushing the costs of independent education ever higher, especially in years 11 and 12.

'In some Australian cities it's not uncommon for independent schooling in Years 11 and 12 to cost up to $25,000 per year in fees alone, and that's before you add all the other costs of schooling, such as uniforms, textbooks and stationery, excursions, camps, music or sport lessons, and computer and internet costs," Frida says.
'Many parents feel the responsibility of choosing a school for their child weighs heavily on their shoulders.

'ASG's research indicates that many parents may be under the misconception that the most expensive school offers children the best education.
'This is simply not the case. The real questions parents need to ask themselves are, which school will meet the needs of my child and help him or her thrive and create a good fit with my family circumstances?" Frida clarifies.

ASG's Recommended Remedy: ASG encourages parents to seek value in education by selecting a school for their child that matches their child's needs, their own education preferences, and offers value.

Mistake 4 – Aiming Too High Too Soon
Most parents will experience the financial changes that come with the arrival of a newborn.

'There always seems to be some new or unexpected expense," says Frida. 'Even when you've followed a budget and planned for a reduction of family income, unforseen expenses pop up. So it's often a time that requires a fair amount of financial juggling."

ASG's Recommended Remedy: Start a disciplined education savings program but don't over-commit your family.

Mistake 5 – Getting Discouraged
Financial impatience seems rampant today–escalating personal credit card debt and household debt are examples of Australian's increasing financial impatience. Anyone who isn't overspending knows plenty of people who are.

'Education is a major expense in life so often it will require a disciplined savings approach to reach your education goals," Frida warns.
'We're becoming so used to the immediacy of accessing our money and getting what we want on credit that as a nation we're losing the skill of saving. However, it's an important skill worth developing and it sets a great example for your children in the long term.
'Families often overlook the total costs of education. These costs exist whatever school setting they choose for their child, and at the post-secondary level, they can escalate dramatically.
'Remember that any amount of savings is better than nothing when it comes to schooling. Even if your savings only covers uniforms, stationery and books each year, it's going to make a real difference when it comes to managing those costs," she says.

At the post-secondary level, young people can defer the fees component of their studies, but deferring these costs can add up leaving a substantial debt hanging over the young person as they enter adulthood. ASG's research shows that living expenses amount to around $7000 each year while a young person is studying, even if they're able to live at home. It's much more if they need to live independently from their family home.

ASG's Recommended Remedy: Small, regular contributions can make a difference in the long term. ASG's Education ProgramTM can be set up for automatic direct debit contributions so that families can have peace of mind because they are setting aside funds regularly for their children's education. At its foundation, ASG's Education Program™ provides for basic secondary and post-secondary costs with contributions starting from around $11 per week.

'This simple, disciplined approach allows you to have funds available for your child's education when you need it most," Frida says and adds, 'you'll feel great peace of mind".
Mistake 6 – Paying Tax on Your Education Savings
Education benefits programs offer the real bonus to parents of taxation advantages if they use the funds for education. Parents who choose a program offering a tax concession for education under the Tax Act, will further maximise the benefits of the contributions they make into their program. These programs are only available through friendly societies.

ASG's Recommended Remedy: Get the benefits of tax enhanced education savings working for you. ASG is Australia's leading not-for-profit friendly society specialising in education benefits. For more than 35 years, it has focused on helping parents provide education opportunities for their children. ASG's Members and their children share the benefits generated by the endeavour.

Frida Kordovoulos says: 'ASG really has the runs on the board. ASG has helped more than 370,000 Member parents plan for their children's education.
'Last year ASG supported more than 51,000 students with benefits for their secondary or post-secondary education costs. Since its inception, ASG has returned more than $1 billion to its Members and their children."

For more information about ASG and its Education Program, phone 1800 648 945 or visit www.asg.com.au