Giving your children the best start in life

Everybody wants to give their children the best start in life – and for many families, that involves paying for the best education available. But without the necessary planning, school fees can be a big drain on your finances. In particular, the need to pay these fees can emerge at precisely the moment when you have other financial priorities, from a mortgage and other investments, to the additional costs of bringing up a family.

At this time in your life, it’s vital for you to be able to access trusted advice from someone who understands all the complexities of your personal situation. At Grosvenor Wealth Management our independent financial advisers (IFAs) will discuss your specific circumstances with you so they can offer a balanced view of the most appropriate approach.

Finding the right balance

Investing in order to pay for future school fees can be a hit and miss affair. These fees are rising all the time and need to be paid at regular intervals, rather than as a one-off payment. This means you need to be sure that you will always have the funds to cover them.

One of the most effective approaches may be to invest a large lump sum so the interest gives you enough returns to cover any future school fees. However, you need to be careful about how much you invest, as you still need to be sure that you can keep on top of your other regular payments, such as your mortgage.

If you do have the means to invest a lump sum, some independent schools run their own schemes that enable you to pay fees in advance, once your child has been offered a place at the school. As well as enabling you to plan your other budgets more effectively, this may also give you a small discount.

One option if you’re a grandparent and want to support your grandchildren’s education is to give them a cash gift. If this was used for their education, it would be free of inheritance tax (IHT).

Alternatively, if you have been left money in a parent’s Will that you want to use for your children’s education, you have the option of amending their Will so the money goes to your children instead. Again, this may help you avoid the possibility of incurring IHT.

You can only change the Will within a certain amount of time after your parent has died, so you should always ask your solicitor for guidance on the best approach.

Other sources of finance

If you are specifically looking for ways to pay school fees, one of the best sources of finance may be the school itself. Many fee-paying schools offer scholarships or bursaries, usually based on certain conditions.

A scholarship may be available at different stages of your child’s time at the school and are usually linked to the pupil’s progress. They can cover as much as half the school’s fees, although on average, they tend to offer up to 20% of the annual fee.

Bursaries are becoming far more popular among schools, who offer them as grants to help pay the school’s fees. They are usually awarded based on the family’s financial circumstances, which are assessed through a means test. In total, across the UK, around £1 billion is available to help parents with school fees, which means almost a third of all private school pupils are eligible for financial support. With the rise in fees over the past few years, at some schools, families with an annual income of £90,000 may still be eligible for a bursary.

Alternatively, there are also a number of other organisations that offer financial help, such as the Royal National Children’s Springboard Foundation, which supports children from low-income homes in boarding schools.

Planning for the future

This is where talking to an IFA can help. Our advisers will look at all your income and outgoings to build up a picture of your financial circumstances. Then they’ll help you to develop a financial life plan that enables you to see how you can meet all your needs. They will also be able to give you guidance on what financial help you may be able to apply for to support your child’s school fees.

With regular reviews to ensure you are keeping on track, or to make any adjustments if your circumstances change – for example if your family expands – we will develop a realistic plan to help you achieve your future ambitions.

Talk to us

We all want to give our children the best start in life by giving them a high quality education. At Grosvenor Wealth Management, we will work with you to understand your finances and develop an achievable roadmap that enables you to support your children.