One of the many services our financial planners provide to our clientele in the Perth area is planning an education for their children. We know that everyone wants to provide for their children and an education is at the top of the list for a lot of parents. According to the Financial Planning Association of Australia (FPA), though, some families may be better off not trying to put the money aside because it could make them become a burden to their children later in life.*
The FPA strongly suggests getting your own finances and lifestyle in order before deciding whether or not to put money away for your children’s education. If you can, though, here are some options suggested by the FPA that can help you save for your children’s education.*
Pay Down Your Mortgage Faster
The FPA suggests that you would be well-served to focus on paying down your mortgage as soon as you possibly can. One strategy includes finding the lowest rates and using a redraw facility to pay for college expenses.*
Investment Portfolio
For those who are younger, creating a diversified investment portfolio with exchange traded funds can be an efficient way to produce income. If the portfolio is in the name of the parent with the lowest income, it can help minimise taxes.*
Insurance Bonds
If you are in a higher tax bracket or you have at least ten years to save, insurance bonds can be efficient. They don’t impact personal taxes and your contributions are flexible within limits. If you need to access any or all of the funds before the bonds reach maturity, you can. However, a tax of 30% is levied within the bond. *
Your Super
If you make additional concessional or personal contributions to your super, they are taxed at 15% but can still increase your savings. However, you can’t get to your money until retirement. The good side of this strategy: you may take care of your retirement early enough to free up funds by the time your children are old enough for college.*
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To learn more, call us today: 08 6462 0888.
*Financial Planning Association of Australia, “Top tips for planning your kids’ education,” 16th September 2015. https://fpa.com.au/blog/top-tips-for-planning-for-your-kids-education/
