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How much will you need to put your kid through high school? A lot!

Dave-JohnsonThe fact of the matter is that life is expensive, and it is getting more expensive by the day. Gone are the days of decent education being provided to the masses for a song, the cost of education is increasing at a rate that is far higher than the Average Joe can begin to fathom, and savings for your child’s education has become an imperative – years in advance. Sygnia’s Company Secretary, Dave Johnson expands on why investing for the glimmer in your eye should start as soon as possible. – Lucienne Ferreira

By Dave Johnson

While school fee inflation isn’t slowing down, the total budget is a lot higher…

Last month, some rough calculations on what the country’s top private boarding and day schools are likely to cost when a new-born is ready for high school in 2027 shocked many.

There’s no two ways about it: children are expensive.

Back in my youth (I’m giving away my age here); I recall the financial services sector focusing on getting parents to save for tertiary education. The theory was that you should start saving when your child starts school. Back then, the government subsidy for school fees was significant. In Matric, my school fees were R28… for the year! Admittedly, that was in 1977.

These days, tertiary education probably costs less than high school for most middle class parents. Those rough calculations that grabbed the headlines back this up. Today, the top (most expensive) day schools charge anywhere from just under R50,000 to R125,000 a year. And the mad rush to get into the best schools often starts as soon your child is born.

To say the cost of schooling has escalated significantly over the years would be an understatement. As a former chairman of a school governing body, I have insight into the costs and issues. It’s not only private schools that are expensive.

The top government (“former model C”) schools are competing with private schools. To do this, school fees need to allow them to provide for significantly more teachers than the education department does (less than a third of the staff compliment at these schools is typically paid for by the education department). Plus, there’s the need to top-up salaries to compete for the best teachers. These types of public schools have fees of around R35,000 (per annum) for 2015.

The problem is, it’s not just school fees. Here are a few examples:

  • Cricket season…when I grew up, the school had a team kit bag. It had three or four sets of bats, pads, and gloves which were shared by the team. Now, you get a note saying your child cannot play unless they have their own kit, which must also include a helmet. A quick trip to the sports store will set you back R2,500 at least.
  • It’s not just rugby, soccer and cricket… many of the minor sports or activities require the schools to involve external coaches and so come at an additional cost. Rowing, fencing, drama, golf, etc. are all great activities, at a price…ching-ching!
  • Music is an essential part of education, but lessons aren’t cheap. And have you tried to buy a saxophone lately?
  • School tours are becoming more and more excessive. Two friends have daughters who went on overseas school tours last year. I hate to think what a “geography tour” to New York, Boston and Washington would have cost. But, even a tour to KZN can easily cost close to R10, 000 once you add up flights, meals and accommodation.
  • Technology…at some schools, parents are required to purchase laptops, but the more subtle force is peer pressure around smartphones and tablets. Phones seem to be a requirement from about Grade 7 (at least!), but its “uncool” to have last year’s iPhone, so many children end up with better phones than their parents. Add in an iPad and one or two other gadgets, and the costs keep rising.
  • Uniforms… I still don’t understand why every piece of clothing needs to be unique to a school? A Speedo more than doubles in price just because it has a school logo on it. And then there’s the specific clothing for specific sports: a school jersey and a school cricket jersey. Success comes at a price. Making the school’s first team is likely to require a whole new wardrobe! Of course we should be proud of the success of our children, but R1,000 for an honours blazer?
  • School “fund-raising”, which is nothing but another way of asking parents to cough up more cash. They may as well increase school fees.

Back to those school fees… you’re not going to get away with much less than R24,000 a year, and if you’re chasing the top schools, prepare for at least double that (but more realistically, quadruple). Fees at a few of the better-known schools for day scholars – Bishops, St Stithians, St Davids Inanda, St Johns – are around R100,000 this year. At inflation of 6%, that doubles by 2027 when your new-born gets to high school. You’ll need R200,000 a year then.

Those rough calculations by Brendon Johns* mean you’ll have to be saving at least R1,000 a month in an index tracking fund to hope to cover high school fees when the time comes (in a money market fund, you’ll need to be saving at least R3,000 a month). Of course, your salary should at least be keeping up with inflation, so don’t fall into the trap of looking at the R200,000 (for example) in today’s terms.

But, you simply have to start saving now (if you haven’t already). Save up before they start school, don’t start then to save for university fees… that’s so last year! By the time high school comes, you’re likely to be able to afford an even better school for your children, if you’ve saved smartly.

And don’t stick your savings in a money market account. Use a low-cost, solid investment vehicle geared at saving for your child’s education.


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