It’s grown increasingly common over the last few years for people in the UK to go to university. The latest figures show a 35.8% entry rate into higher education for 18-year-olds. This is great news for young people, who are accessing opportunities for learning and personal development that they wouldn’t otherwise get, but it can definitely also mean some financial stress.
Being able to afford increased tuition fees is one thing, while the cost-of-living crisis also impacts students’ day-to-day lives as they face more struggles to pay for bills and essentials. It all means that, if your child hopes or plans to go to university, the more planning that you can put in place to make it happen in a way that’s financially secure for all of you, the better.
Starting early
The earlier you begin saving for anything, the more valuable it becomes to do so. If you’re holding money in a savings account, this will be because of compound interest – when you earn interest on an amount that’s already been expanded by interest earned previously. This growth might seem small from the first year to the second but watch it balloon over five years, 10 years or more and you’ll see what a significant effect it adds up to be.
If you’re looking to make your money go further through investments, time is also your friend. A portfolio of stocks will give you its biggest returns when given the time to consistently grow in value. If you’re working with a professional investment advisor, communicate to them your goals for your child’s education so that they can recommend a suitable path to the figure you have in mind.
Explore your options
There are some savings methods designed specifically for young people, like junior ISAs which – like adult ISAs – allow kids to save money on a tax-free basis. These can be a good way to build up some funds, the control of which would transfer to your child when they turn 18. You might prefer a non-ISA children’s savings account, though; these are subject to some tax on interest as well as lower thresholds on what you can pay in and withdraw each month, but they are more suitable to teaching your child how to manage their money responsibly, which in turn may help them to build a better credit score when they come of age.
If you are looking to make investments to achieve your goals and you have a partner on a different level of income tax than you, it might be worth considering whose name the investments should be under. Attributing them to the person on the lower rate of income tax may make your money go further.
