Can you afford Private School?

At 29, my friends are all starting to have children.

I recently played golf with a close friend who is a first time Dad-to-be. Amongst the usual polite baby chat, I asked whether he’s considered the extra cost of having a baby.

He was shocked to learn the basic cost of raising a child up to age 18 is £153,000[1]. Not only that, my friend also wants to send his child to private school. He attended private school himself, and research shows that private schooling leads to improved academic performance.

“I get it, you want the best for your child” I said, “but the sooner you start planning, the better”.

Here is why:

The average fee per term for a private day school in the UK is around £4,763, which equates to over £14,000 per year[2]

Independent school fees continue to rise faster than inflation; between 2010 and 2019 fees increased 3.9% per year on average.

The ability to finance school fees on a pay-as-you-go basis out of taxed income is a colossal commitment. School fees are typically paid per term, which is subject to annual price increases.

You would therefore need an eye watering £246,000 to fund primary and secondary school.

No parent wants to disrupt their child’s education and friendships part way through because they have run out of money.

However, let’s consider putting a plan in place. By putting aside £153,484 today and assuming 5% growth, you would be able to fund the entirety of your child’s education. Investing this money utilises the power of investment returns and compounding to grow your money above inflation.

So planning ahead could save £93,000.

The outcome? A very significant portion of the heavy lifting would be done by investment growth.

By using a sophisticated computer software, we’ve since built a robust financial plan for my friend. He doesn’t have the £153,484 spare. Instead, the school fees are affordable by a combination of a lump sum (with grateful help from willing parents and grandparents), alongside regular savings. The outcome:

• Confidence in being able to send his child to private school
• No impact on lifestyle and plans for retirement
• Security the fees can be met as they fall due
• Reducing the financial burden

Are you considering private school? Please get in touch and we can help build a plan.

[1] Source: CPAG Report October 2020: https://cpag.org.uk/sites/default/files/files/policypost/CostofaChild2020_web.pdf

[2] Source:  Independent Schools Council 2019 Census and Annual Report: https://www.isc.co.uk/media/5479/isc_census_2019_report.pdf