Saving for school fees? The sooner you start, the better
There’s no getting away from it children are expensive, particularly if you are planning to fund private school and/or university costs. The earlier you begin setting money aside, the more manageable the monthly commitment can be, thanks to the power of long-term growth.
However, it’s important to choose the right savings structure depending on when you expect to need access to the money.
Why should you use a Junior ISA?
Using a JISA is a sensible way to build a pot of money for your child, which can help to pay for various milestones such as university fees, a wedding, or even as a deposit to help them to buy their first home. Parents, grandparents, plus wider family and friends can all add money to the JISA, and the tax breaks explained above make it an appealing investment vehicle, and it will be in your child’s name.
You can open either a cash JISA or stocks and shares JISA for your child, and you can put up to £9,000 each year into JISAs for each child, as a maximum across both types. The money can be added to year after year, and will become available to your child when they reach 18.
It will be very useful, because even at today’s prices, these milestones cost a lot of money. The table below gives some examples of how much various life events currently cost, and shows how much you would have needed to save over the last 18 years per month to meet these estimated costs. The values assume a 5% growth per year, less a 0.75% annual management charge, but don’t take inflation into account, which over time will erode your spending power as costs rise.
| Life milestone | Target pot at age 18 | Monthly contribution | Total invested over 18 years | Value at 18 after growth | |||||
| Learning to drive & first car | £6,250 | £20 | £4,320 | £6,495 | |||||
| Gap year / travel pot | £10,000 | £31 | £6,696 | £10,067 | |||||
| Wedding | £20,600 | £64 | £13,824 | £20,784 | |||||
| House deposit (5%) | £13,500 | £42 | £9,072 | £13,639 | |||||
| House deposit (10%) | £27,000 | £84 | £18,144 | £27,279 | |||||
| University costs (3 years) | £65,800 | £203 | £43,848 | £65,924 |
Source: Fidelity International
The importance of planning ahead
Most parents wouldn’t be able to save enough money to cover all their child’s life events, or even some of them, depending on their circumstances. But the figures in the table show how effective it is to start saving as soon as possible.
Jemma Slingo, Pensions and Investment Specialist, Fidelity International said: “For many families, the aim is simply to take some pressure off at key moments – whether that’s helping with first-year university costs, contributing towards a house deposit, or giving their child a financial cushion as they start adult life.
“What matters most is starting early, setting a contribution that feels manageable, and sticking with it.”
Disclaimer
This article is provided for general information only and is not intended to constitute tax advice, financial advice, or a recommendation of any product or investment strategy. Tax treatment depends on individual circumstances and may change. ISA and Junior ISA rules, limits and eligibility criteria are set by the government and can change. Investment values can fall as well as rise, and you may get back less than you invest.
Before acting on anything in this article, you should consider your objectives and circumstances and, where appropriate, obtain professional advice. For investment advice you should consult an FCA-authorised financial adviser. While we have taken care to ensure the information is based on publicly available UK government guidance at the time of writing, we do not accept responsibility for losses arising from reliance on this article or from third-party commentary/estimates referenced within it.
We can help you
If you are already saving for your children and want to check things are on track, or you would like to start, then please contact us and we will do everything we can to assist you.