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5 Smart Financial Strategies to Beat Rising Private School Costs
Whether your children are already attending private school or you’re planning ahead, you’ve probably noticed how quickly costs are rising. According to the Institute for Fiscal Studies*, private school fees have risen in real-terms by 20% since 2010 and 55% since 2003, making it increasingly difficult for many families to afford. Plus, the new Labour Government has signalled plans to charge tax on private school fees.
This doesn’t mean private school is out of your reach, however. There are several strategies to make it fit your family’s finances, no matter how old your child is – you simply need to know the right steps to take.
Lester Brunt’s financial advisers have helped countless families get their finances on track, including managing the rising costs of private education. Below, we explore five practical strategies to help you tackle growing school fees.
1. Plan Early
One of the best things you can do is start planning for your child’s private education early. By registering them for a school as soon as they’re born and setting aside money regularly, you could have a substantial nest egg – bolstered by compound interest – ready by the time they’re old enough for secondary school.
Of course, saving that much money isn’t always easy, so it’s a good idea to combine this approach with other cost-saving strategies. And don’t worry if you haven’t started saving early – we’ve detailed plenty of other options you can look into below.
2. Explore Payment Options
Another good way to manage costs is to explore the school’s payment options. These can include financial plans and ways to reduce fees. For example:
- Bursaries are financial awards based on a family’s income and can significantly reduce or even cover the entire cost of school fees. The good news is that funding for means-tested bursaries has risen over the past decade. This means that around a third of students now receive financial support towards their fees.
- Some schools reward families who pay their fees in advance with discounts. These discounts can vary from a small percentage to a more significant reduction in the overall fee.
- Private schools often provide scholarships to students who excel in academics, sports, or the arts. These can directly reduce the cost of fees, or they can provide financial relief by covering expenses such as tuition, books, or boarding.
- Some schools offer specific fee assistance programmes to support families facing financial challenges. These programmes may provide grants, loans, or payment plans tailored to individual needs.
3. Build Money Tax Efficiently
Saving for your child’s education is most effective when done through tax-efficient plans. These allow more of your money to go towards their future, rather than to HMRC.
You can save up to £20,000 per year, or £40,000 for couples, in tax-efficient Cash or Stocks and Shares ISAs. However, if you’re planning to save for significant school fees, these might not offer the best growth potential.
Investing in stocks and shares through a Stocks and Shares ISA generally offers a better chance of growing your money over the long term compared to cash. Keep in mind, though, that stock market investments can fluctuate, so there’s a risk you could lose money.
It’s also worth noting that the new Labour Government has expressed intentions to charge value added tax of 20% on private school fees. This potential change underscores the importance of tax-efficient saving and investing strategies to help mitigate the impact on your family’s finances.
4. Plan for Unexpected Changes
Life is full of surprises, and even the best-laid plans can take an unexpected turn. A sudden job loss, health crisis, or home damage can easily derail your savings goals. To protect your child’s education fund, consider these steps:
- Aim to save 3-6 months’ worth of living expenses to cover unexpected costs like job loss, medical bills, or home repairs.
- Insurance can be a safety net. Among the many options available, two worth considering are life insurance, which provides financial support if you pass away, and disability insurance, which offers assistance if you’re unable to work.
- Don’t put all your eggs in one basket. Having a mix of stocks, bonds, and cash can help weather financial storms.
- Be prepared to adjust. Economic downturns, changes in family income, or unexpected costs can impact your education plans. Explore different options and talk openly with your child about your finances. Be honest, but reassure them that you’re working hard to secure their future.
5. Get Help From a Wealth Management Firm
Finally, it’s always smart to work with a professional wealth management firm. Their financial experts can help your family create a comprehensive plan that covers education costs and other financial goals, often by using strategies like those mentioned above. They can also provide expert guidance on managing expenses until your child graduates.
Plan Ahead for Your Child’s Education with Lester Brunt’s Financial Planning
The rising cost of private education can feel overwhelming. But with careful planning, you can secure your child’s future without breaking the bank.
At Lester Brunt, we have over 25 years’ experience helping families like yours achieve their educational goals. Our experienced financial advisers will work closely with you to create a personalised plan tailored to your goals, exploring smart saving strategies and tax-efficient investments to build a strong financial foundation for your child’s education.
Ready to start planning? Book a no obligation consultation online or call us on 01202 695 801 today.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA.
The levels and bases of taxation and reliefs from taxation can change at any time and are generally dependent on the individual circumstances.
Cash ISAs are not available through Lester Brunt Wealth Management or St. James’s Place.
*IFS Report R263 Tax, Private School Fees and State School Spending 2023.
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Written By Michael Lester
Financial Adviser
Lester Brunt Wealth Management
Lester Brunt Wealth Management is a trading name of Lester Brunt Wealth Management Ltd