New figures indicate that parents are piling financial pressure upon themselves by funding their child's private education.
According to the latest research by JPMorgan Asset Management (JPMAM), almost 1 in 5 parents (18 per cent) have been shown to have reduced or missed payments to either their partner's or their own pension scheme in order to pay for private education for their children. A staggering 36 per cent indicate that they have used money that was being saved for other purposes to pay for a private education. Findings from the firm also showed that 25 per cent of parents are happy to take money from their saving and investment accounts rather than create a specific fund for their children's schooling - only eight per cent of respondents were indicated as setting up a scheme for this particular purpose.
Commenting on the figures, James Saunders Watson, head of sales and marketing for investment trusts at JPMAM, reported that by consistently making such sacrifices parents could be damaging their ability to service other demands on their finances such as making personal loan and credit card repayments.
He said: "It is concerning to see that so many parents (18 per cent) feel the need to make sacrifices or reductions to either their own, or their partner's pensions, in order to fund their child's private education. What's also worrying is that the costs of private education can eat into standby savings which some parents may have put aside for a rainy day to use on other financial commitments such as saving for a family holiday or funds for unexpected costs or emergencies."
And with 29 per cent of parents claiming that private education costs account for nearly a fifth of their annual income, it was suggested that such expenses can be a "significant financial sacrifice" for many mums and dads. Consequently, a number of consumers were shown to be using "cash windfalls" to fund their child's tuition, as 16 per cent look to use their bonus and eight per cent use inheritance money - both sources of income which are not guaranteed. Mr Saunders Watson added that the recent "volatility" seen in the global economic market should act as an indicator that consumers should look to save or invest money regularly instead of contributing "lump sums on an ad-hoc basis".
Those concerned they will be unable to manage the costs of sending their child to private school may wish to take out a debt consolidation loan. By merging previous debts accrued from various loans, credit cards and other forms of borrowing, consumers may be able to free up more money each month which in turn could be put toward tuition fees or saving into a pension scheme. Earlier this year, Adrian Kidd from Mint Financial Services claimed that opting for a debt consolidation loan could be a wise option for those wishing to pay off money on a number of plastic cards.
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Source: http://www.articlealley.com/article_217458_19.html
