Guiding consumers since 2009

Save for education and push back poverty

By Staff Writer

Inspirational goals drive South Africans to save when all else fails - and no goal for young families is more inspirational than saving for their children's education.

A key ambition of the South African Savings Institute (SASI) for National Savings Month was that the annual awareness-raising initiative will spur parents to think about long-term objectives, especially the need for educational saving.

The Savings Month theme - ‘Save for the Goal: The Path to Recovery' - showcased the role goals have in any savings strategy and that savings can help jump-start a new beginning.

South Africans are united in their desire for a better education for their children, said SASI chief executive officer Elizabeth Lwanga-Nanziri.

She noted that "all families, no matter what the socio-economic group, want the best possible education for their children."

"The state obviously has a role to play as provider of good basic education, but there is broad recognition that the best possible start in life requires family support."

Educational focus prompts families to make an early start on long-term saving - a key SASI objective. Educational saving is also a way of fighting poverty.

Elizabeth Lwanga-Nanziri explains: "Education is vital if we are to break the cycle of poverty."

"Young people with a good education build careers, earn a better income and save for the education of their own children who also develop enough earning power to keep poverty at bay."

"No savings goal could be more inspirational."

Financial service companies offer a wide range of educational savings products, says SASI. Some families prefer to commit initially to a general savings product, establish a cash reserve and then look at specialised medium- and long-term savings products.

When looking at longer timeframes the need to keep abreast of inflation becomes a key issue.

Here, a useful tool is ‘The Rule of 72', a way of estimating doubling and halving times. To find a rough doubling or halving time you simply divide 72 by the relevant figure.

So, assuming inflation stays fixed at perhaps 6%, the value of money halves in 12 years (72 divided by 6 = 12). This indicates that university fees corrected for 6% inflation could be TWICE as high in 12 years' time - a key factor when providing for a child of six that might be ready for university at age 18.

"Inflation complicates the challenge of saving for long-term goals like education," says Elizabeth Lwanga-Nanziri. "The simplest response is to start a savings plan as soon as possible and stick to your plan. Top it up if you can."

Have a savings related question? Justmoney.co.za has a wide range of financial experts to help you out.

Recent Articles

Featured Travel ban – how to claim for the loss incurred

As with the recent Covid-19 pandemic, governments sometimes issue travel bans to prevent people from travelling to other countries. This becomes even more complicated if you’ve already planned and paid for your trip. Your flights will be cancelled, and you may lose money from cancelled accommodation arrangements. How do you claim for the financial losses incurred due to a travel ban?

How to finance and insure a second-hand vehicle

Buying a second-hand vehicle may suit your budget better than acquiring a new one. But what impact does an older model have on vehicle finance and car insurance? We reached out to specialists in the field to explain what the financial implications are of pursuing a second-hand vehicle.

Reading your loan agreement: look out for this

Many people don’t read their loan agreements. They just sign on the dotted line without realising that they could be signing their lives away. But it’s important to review your loan agreement before and after taking your loan to avoid future setbacks.

 

Part 1: The difference between good and bad debt

In the first part of our Debt-ucate series we explore the difference between good and bad debt and why debt is, in fact, necessary.

Deals

Udemy online course for R180

Price: R180
When: Until 27 March 2020
Where: Online

Educate your kids for free with Skills Share

Price: Free
When: Daily
Where: Online

Take advantage of payment holidays from Standard Bank and Nedbank

Price: Free
When: From 1 April to 30 June 2020
Where: Nationwide