The Australian Scholarships Group1 recently announced that Australian parents could soon be paying up to $65,829 to educate a child at a government primary and secondary school. For average families of two or three children this represents a significant financial commitment for many Australian families.

According to Ryan Dobbrick from Cotter Financial Services, education is among the largest expenses faced by Australian families and one that is about to get even larger.

“It is critical that parents are prepared and that begins with awareness. For many people, they simply do not realise the significant cost of educating their children and of course, this cost increases dramatically if parents have desires for private school education.

“The key is to begin planning early, considering a realistic savings strategy before children begin school and that continues throughout the schooling years,” Mr Dobbrick said.

For parents whose children will go on to tertiary studies, there is little chance of the costs abating as they can expect to pay between $6,152 and $10,240 per child per year for the three or four years of an undergraduate degree, depending on location and discipline2.

And Australians would be unwise to rely on government loans to cover their children’s tertiary education expenses.

Indeed, the 2015 Intergenerational Report3 states that government spending per higher education student is projected to fall from $11,800 in 2014-15 to $9,400 in 2054-55.

Furthermore, government funding does not cover the additional costs of books, materials, union fees, participation in clubs and sports, transport or accommodation.

“Many parents will need assistance in first calculating the likely cost of education for their family and then setting out a financial strategy that will enable them to achieve their education goals for their children in relation to their other financial commitments.

“Appropriate strategies may include savings accounts, term deposits and investing in shares and managed funds and implementing specifically designed education financial plans,” Mr Dobbrick said.

But according to Mr Dobbrick, shoring up children’s education involves more than just savings as parents need to be realistic in terms of catering for the long term commitment of schooling, by anticipating the impacts of future unexpected events.

“It is essential for parents to consider unforeseen events that could jeopardise their financial position, such as sudden loss of income through injury or illness or, in the worst case scenario, death or disability of one or both parents. While savings for the kids’ education may sound straightforward, in reality it involves many interrelated factors and this usually requires professional advice,” he said.

Mr Dobbrick said that experienced financial planners will recommend strategies for parents to protect themselves and their family from unwanted events that could deprive them of their income and their family’s ongoing financial security, including funds earmarked for their children’s future education,” he said.

“Having appropriate personal insurances in place for both parents is important and this needs to be approached in tandem with asset protection structuring and estate planning. In the event of a claim for the untimely death of one or both parents, it is important that financial matters are clearly documented so that the family may recover as quickly as possible and ultimately achieve all their financial goals, not only those for education,” he said.

The team at Cotter Financial Services are available for consultations with parents to discuss education savings strategies within the context of your whole-of-life financial planning arrangements.

Cotter Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357 306 trading as Fortnum Financial Advisers. This information does not consider your personal circumstances (including taxation) and is of a general nature only. You should not act on the information provided without first obtaining professional financial advice specific to your circumstances.

The views expressed in this publication are solely those of the author; they are not reflective or indicative of Fortnum Private Wealth Pty Ltd’s position, and are not to be attributed to Fortnum Private Wealth Pty Ltd. They cannot be reproduced in any form without the express written consent of the author.

1. ASICS MoneySmart website, accessed 17 June 2015 at https://www.moneysmart.gov.au/managing-your-money/saving/saving-for-your-childrens-education

2. Indicative undergraduate fees for Australian students, University of Queensland website, accessed 18 June 2015 at http://www.uq.edu.au/study/indicative-fees.html?level=ugrd&nationality=australian&dual_degree=False

3. 2015 Intergenerational Report, Australia in 2055, accessed 17 June 2015 at http://www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/2015%20Intergenerational%20Report/Downloads/PDF/2015_IGR.ashx

I believe that Trauma Cover is miracle cover – it pays out a lump sum of your choosing in the event of a specified medical condition.

It was originally developed in the 1980s when advances in medicine meant that people having a major medical trauma would recover, but would not receive a payout under their Total & Permanent Disablement Insurance, as they would return to work after a number of months of treatment and were not permanently disabled. Most Insurers cover around 30 different medical conditions; heart attacks, strokes, cancer and bypass surgery make up approximately 95% of all Trauma Claims1.

Trauma Cover payouts can be used in a number of ways, such as pay down of some debts, pay for a spouse to take time off work to care for you, pay for any private medical costs above health insurance, pay for adjustments to your home or even to chase alternative overseas medical treatments or to just take a holiday.
A great example is of my father who had a heart attack some years ago and although he had full Private Health Insurance, the bills for ongoing rehabilitation were well into the thousands. My mother had to take time off work to care for him, which was not covered by any type of insurance.

The last thing anyone needs when having health stresses is to have financial stresses also.

The unfortunate statistic is that the chance of suffering a trauma insurance insured event prior to age 65yrs is – 1 in 2 for a male and 1 in 3 for a female2, which makes the likelihood of us claiming on these policies quite high. One strategy to consider for people aged 45yrs or below, is to structure your Trauma Insurance with a Level Premium rather than a Stepped Premium. Reason being, is that although the Level Premiums are higher in the earlier years, in the later years when the likelihood of a medical condition is higher (ages 55 – 65yrs) you will be paying a much lower premium if a Level Premium is selected.

For more information on Trauma Insurance or any other Insurance please contact  Cotter Financial Services on 07 3333 2610.

Penned by Ryan Dobbrick for Healthy Living Ipswich.  The information provided is general in nature and does not take into account your particular investment objectives, financial situation or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions. Cotter Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306 T/A as Fortnum Financial Advisers.

1. Data provided by AVIVA which shows their claims paid for Trauma Insurance between 2004 and 2008
2. Source: Pricing Dread Disease Insurance – Institute of Actuaries of Australia March 2002