Source: Liberty 2012

This means that for every R100 you spent on general consumer goods in 1990 you now have to spend at least R446. This translates to an increase of about 7% p.a.

For every R100 you spent on education in 1990, you now have to fork out a staggering R1,362 which equates to almost 13% p.a.

If your salary increased in line with inflation (which is a reasonable assumption) you would be R916 short not to mention the shortfall if, for some or other reason, you can no longer provide for your family.

Today more than ever affording your child's education requires diligence and commitment.

Four steps to afford your child's education:

  1. Have a structured savings plan in place. Most importantly, you have to stick to it. Think about your children's education when they want the latest PlayStation or iPhone.
  2. Determine how much the envisaged education costs today. Remember to include all costs such as travel, boarding and study material
  3. Pick an investment that will keep up with education inflation. The All Share Index as well as Listed Property should be a good match for this. A registered financial adviser will be able to recommend the most appropriate investment portfolio.
  4. Invest on a monthly basis. The monthly investment amount depends on the duration before you have to start drawing from the investment, how long you will draw and lastly on the amount required for education. A financial adviser will be able to assist you in calculating the monthly contribution required to reach your goal.

Once you have followed these four steps it is critical that you stick to the plan and to review it annually to take any market movements into account.

* This report was prepared by Liberty