Neil & Katy
A university education isn't cheap!
Neil and Katy both realised how much their own university education had helped them get to where they wanted to be. Now with two daughters, they knew they had to plan carefully to make sure their girls had the same start in life.
“Looking back, Katy and I had both found our own university experiences invaluable in helping us advance in our careers and live the life we wanted to. That’s why when we had our two daughters, Heather (3) and Isabelle (9 months) we knew we had to plan ahead in order to be able to afford to give them the best start in life we could.
If we left saving for their university fees until nearer the time, it would be an impossible task to send them both - given the rise in the cost of living, not to mention the new fee charges that the government has recently brought in.
Planning over 18 years
To start with, I worked out what the likely cost of an undergraduate degree was going to be – projecting forward 18 years. Then I worked backwards, in order to determine how much we would need to save each month, to accumulate that lump sum over the period of time.
We decided to use the regular monthly savings plan feature which is offered by many investment companies, as over the long-term we felt that the returns we’d see from investing in the stock market would likely be better than those available from saving our money into a cash account. Our family budget was adjusted to incorporate these new payments. Regular investment plans help people to gain exposure to the stock market by investing amounts usually starting from £50 a month.
For us, there are strong benefits to buying into our investment plan each month. When markets take a tumble, like they have in recent times, we end up buying lots more units which we don’t plan to sell for the next 16 years. This hopefully gives plenty of time for recovery and for us to see good growth.
It’s great to have the flexibility
Over the longer term, I hope that the market ups and downs will work to our advantage and help us to achieve our target sum – maybe even ahead of time if things go well. As with all aspects of Financial Planning, regular reviews are essential. We review things at least annually to make sure we’re on track, and it’s great to have the flexibility to increase the amount we invest should the family finances allow for that in future. ”