Educational opportunities come at a cost
THE sun is shining but there's a definite nip in the air as you set off down the road to the bus stop in your new uniform.
September brings back memories of school for many of us – and for parents and grandparents it reminds us that we want to give the coming generation the best educational chances.
Some will opt for private schools, others for the state system, but whichever you choose it won't come cheap.
So this could be the season to start saving towards school fees, university costs or simply the expenses of a growing family.
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The Good Schools Guide offers plenty of advice on possible savings routes, which depend upon how much you aim to accumulate and when you will need to fork out the cash.
You will need to bear in mind that school fees inflation is much higher than general inflation. Fees in the South West have risen 79 per cent in the last decade.
The website schoolfeesexpert.co.uk suggests you make a savings plan, review it regularly and only alter it if circumstances change considerably.
It recommends that you research the market thoroughly, visit schools, attend open days and ask to speak to current parents to learn from their experiences.
The Independent Schools Council says the average annual fee is now £13,788. The day pupil figure is £11,709 and the boarding pupil figure £26,340.
Up to a third of pupils have some sort of assistance with fees.
The school's bursar should be able to give you advice about bursaries, scholarships and sibling discounts.
For example, Clifton College in Bristol charges £6,900 a term for a 13-year-old day pupil and £9,900 for a boarder of the same age.
Like other independent schools, it offers a range of scholarships giving reductions of up to 25 per cent for students with aptitude in particular subjects and means-tested bursaries, which can be for as much as 100 per cent of the fees, for able candidates from low-income backgrounds.
Some independent financial advisers specialise in helping plan for education costs.
Danny Cox, of Hargreaves Lansdown in Bristol, said: “The foundation of every good financial plan is to hold some cash in an immediate access account. This acts as an emergency fund. You can take a longer term view with other cash and take advantage of fixed term deals, however be careful not to tie up money you may need.”
You can help work out the best savings accounts for you by doing some homework online.
A good way to compare the various options is to visit comparison website Moneysupermarket.com, and see what deals are currently available.
You can then see whether it is worth having access to your savings, or whether you're happy to lock your money away.
As a saver, it's crucial to monitor your savings on a regular basis, if not, you could find your money is languishing in an account paying a paltry rate.
This is more important than ever in the current environment, where interest rates have been driven down to all-time low levels.
As well as checking the headline interest rate, you need to look at the minimum investment requirements, the number of withdrawals that are permitted, and whether the account has an introductory bonus which will drop away after a set period.
The good news is, there are various different types of account available to meet different circumstances, and to suit your preferences.
An attractive option if you won't need access to your money at short notice (unless something unexpected crops up, of course), is a fixed-rate cash individual savings account (ISA).
The big advantage of an ISA is that the returns are tax-free - helping to compensate for relatively low interest rates. The annual allowance for a cash ISA is £5,640, and it is a good idea to use this allowance before opening a non-ISA account where you would have to pay tax on your interest.
If you're saving up for a goal that is a few years away, you could tie your money up in Halifax's three-year ISA Saver Fixed paying 3.50% - or if you can afford to lock it away for even longer, you could choose Halifax's five-year ISA Saver Fixed paying 4.00%.Both accounts have a minimum investment of £500.
Santander is paying 3.20% on its one-year Fixed Rate ISA on a minimum of £500 and includes the added attraction of permitting transfers-in from previous years' cash ISA holdings, offering you the opportunity to consolidate your tax-free savings in one place.
Fixed-rate onds are another option if you won't need the money for a few years. You could consider a one-year fix from the United Bank UK paying a competitive 3.45% before tax on a minimum of £2,000.
With fixed-rate bonds, it's important to shop around once your existing deal ends. Think about trading up to a longer-term fix, since longer terms generally mean higher rates.
If you need more flexibility or simply don't like the idea of tying your money up for a period of between one and five years in a fixed-rate bond or fixed-rate ISA, you should look to an easy access account instead.
The West Brom building society is offering 3.06% on its Direct Bonus Account 5 on a minimum deposit of £10,000. The Derbyshire NetSaver Issue 4 pays 3.06% and has a minimum investment of £1,000, with unlimited withdrawals without penalties. The Nationwide MySave Online Plus also pays 3.06% and permits one penalty-free withdrawal per year. But all these rates include a bonus.
If you're starting from scratch, you could opt for the ING Direct Savings Account which is paying at 3.0% AER (2.96% gross) on a minimum of £1. This account also permits unlimited withdrawals without penalty, and the rate includes a 2.46% bonus for 12 months, meaning the rate will fall to 0.50% at that point.
If you are saving out of your monthly income, you might want to consider a regular savings account into which you pay a certain amount each month. But before signing up you need to read the terms and conditions, as these accounts can often come with lots of restrictions.
With a regular saver, you must pay into the account each and every month, usually for one year. Some also place restrictions on the maximum amount you can save each month, often no more than £250. Plus, if you miss a payment in any one month, the interest penalties can be steep.
That said, you may be happy meeting all these rules to benefit from a decent rate of interest.
West Brom building society is paying 4.10% on its Fixed Rate Regular Saver (Adult) into which you can make monthly investments of between £10 and £250 for one year. With this account, you can miss up to two monthly payments - giving you a bit more flexibility - but no withdrawals are permitted without penalty.
Barclays is paying 3.25% on its Monthly Savings account into which you can make monthly investments of between £20 and £250. With this account, you will get a lower rate of 3.03% in the months where you make a withdrawal.
Please note: Any rates or deals mentioned in this article were available at the time of writing.