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University Costs Top Parents Fears
| Date: 24 October 2011 |
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By A. Velasco
On average, higher education students face debt of over £50,000. Because of this, it is no wonder that a recent survey found parents worry more about university fees and student loan debts than any other issue facing their children, including pregnancy or drugs.
One traditional way to help your children avoid debt is to start a savings account in their name, such as Shepherd’s Young Savers Plan.
However, there are ways to avoid the financial problems of university, like paying bills on time so as not to get a poor credit rating, and making sure rental deposits are always returned.
Encourage good habits
Another way to ensure that your mind rests at ease when your children start university is to teach them good fiscal habits now.
One idea is to show them how to keep a spending diary, so that you are both aware of the inflows and outflows of their budget. Teaching them habits such as budgeting and saving money towards a goal are the kind of skills that can help them immensely when they become responsible for their own finances.
Another tactic that parents have found successful is encouraging your child to open two bank accounts: one for essential living expenses such as rent and food, and one for social spending.
A third account, such as a Child Tax-Exempt Savings Plan (CTESP), can obtained from Friendly Societies and let your child save up to £25 pounds a month, tax-free. This kind of account, because of the small nature of the contributions, is perfect for showing your children the value of saving over a long period of time.
Battling rising costs
Another way to help battle the sharp hike in university fees is by starting a Junior ISA in your child’s name. This type of account allows you to save up to £3,600 per year, tax-free, for your child’s education.
One benefit from this is that your child can have both a CTESP and a Junior ISA at the same time, which maximises the tax-efficiency of the savings.
The savings from these accounts can build up over the full 18 years that they are children, meaning that your child can not only use this money towards an education, but for property, a first car, or even a wedding.
MyEggNest's Top Tip: Shepherds Young Saver Plan
Child Tax Exempt Savings Plans (TESPs) are currently the most tax efficient way to save for your child - and Shepherds Young Saver Plan gives you the chance to lock away more per month than any other TESP.
The plan allows parents to save from as little as £7.50 to £100 each month - 4 times more than any other provider - and offers sickness benefits, along with the ability to withdraw up to 25% of the fund after 10 years.
For more information and reviews, click here
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