With private school fees at Macquarie Grammar School (Sydney) over $19,000 – excluding boarding costs – and annual increases higher than wage growth, education costs are a big hit to your after-tax cash flow.
Education costs can be things like school, university and TAFE fees, extracurricular activities, uniforms, books, transport, accommodation etc. As you can see, it can add up, so unless you are certain that you will be able to fund these expenses from your current cash flow, it is best to start planning for school fees early. Always remember that education costs are not going to get any easier or cheaper.
Unfortunately, there isn’t a one-size-fits-all approach to funding education. The issues you will need to consider include:
- Your income and marginal tax rate;
- Your capacity to save (i.e. surplus cash flow);
- Your timeframe (how long before you need to access the funds); and
- Your investment experience and tolerance for risk.
Some of the options available to funding education are:
- Taking from your household cashflow;
- Prepaying School Fees;
- Making additional payments on your mortgage or into an offset account now to free up cashflow in the future, or to provide the ability to redraw in the future;
- Taking out an Insurance/Education Bond, which has some great tax benefits;
- Borrowing money; or
- Funding from a regular savings account, or investments(has greater flexibility)
https://www.studyinaustralia.gov.au/english/live-in-australia/living-costs