Planning for the new school year

With each September comes a fresh academic session; one of the most financially tasking times for parents of school-aged children. Parents have to pay for tuition, textbooks, uniforms and accessories, stationery and supplies. How can parents ensure that this time does not put a big dent in their purses, their peace of mind and even their relationships?

The obvious way is early preparation. Target savings accounts (in banks, insurance companies, microfinance banks and finance houses) encourage small but regular savings towards a target event; so that the financial burden is spread out and eased. So, let us prepare our September budget early and begin saving early. We could even use the target savings account to receive dividends from Stock Market investments. Target savings accounts are also useful for other financially heavy expenses like annual rent, wedding, prenatal care/naming ceremony etc. Early preparation also helps us to proactively identify ways of reducing our school related expenses.

Many school proprietors would consider a discount if a parent has two or more children in one school. Others are willing to give discounts to parents who can afford to pay the full session (three terms) fees in September. So, parents explore these discount opportunities and save money.

Apart from tuition, other hefty expenses are textbooks, school branded stationery, uniforms, sportswear etc. Parents need to consider hand-me-downs from older siblings, so long as the items being handed down are well preserved and would not cause embarrassment to the receiving child. However, some textbook publishers are frustrating the hand-me-down culture. They change pages of topics and move chapters around without changing any of the learning material in the textbook; all so that children using another edition of a book cannot flow along with their classmates. When we buy new uniforms and books, we need to label them well (not too conspicuously as to cause embarrassment) so that it can be returned to the child if lost. Backpacks, pencil cases, Math sets, sandals, socks, and stationery should also be appropriately labeled.

Many parents pay for school lunches without asking if they can opt out. Packing lunch for children may seem like an additional task that parents are not willing to add to their morning routines. But consider the monetary gains, if it is worth your while, experiment for one term. Home packed meals are usually cheaper than school meals, in addition to being healthier and fresher. Try a main dish with a small fruit and a dessert (e.g. biscuit or cake); the uniqueness would make your child very happy.

Car-pooling is rare in Nigeria, but I went to primary school via car-pooling. Parents who live (or work) in the same area with children in the same school take it in turns to pick up each other’s children. It saves the parents time, energy and money. It gives the children a wider social circle because they bond with the other children in the carpool. For smooth operations of a car-pooling arrangement, school authorities should be alerted about it upfront so they can release children to other parents in the group.

Little drops of water make a mighty ocean. In financial management, this proverb is very applicable. The small amounts we save from car-pooling, home packed lunches, hand-me-downs etc. would certainly add up to a significant amount that can be invested in income-generating assets for the family.

University education requires meticulous financial planning. Parents need to start early. Some wise parents use cash gifts from naming ceremonies to kick-start education plans. Then save small amounts regularly until the child is ready for university. These college funds (as they are known in the U.S.) are available in banks, trust companies and insurance companies. Plans from insurance underwriters have a very important advantage because they carry a life insurance component that guarantees that the full amount of the plan would be paid for the child’s education in the event of the contributing parent’s death, irrespective of the amount contributed. However, because of the insurance cover, their plans generally deliver suboptimal return on investments. Before buying an education plan shop around and do a comprehensive due diligence on the plan provider – would they still be around when your child is 18 and can they deliver the guaranteed return on investment? How old is the company, has it been around long enough to have paid out on previous customers’ plans? What are their antecedents?

With the COVID-19 protocols that demand social distancing and remote learning infrastructure, education related expenses would only get higher still. Let us be proactive and plan ahead to ensure we can give our children whatever education they aspire to. Happy new school year. Happy investing in our posterity.

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