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FNB Education Insights Survey reveals 49% of parents have a structured education savings plan, despite 86% planning for school costs, highlighting financial education gaps.
JOHANNESBURG, Gauteng — The latest FNB Education Insights Survey has revealed that only 49% of parents have a clear, structured education savings plan in place, despite 86% of them actively planning for their children's education costs. The survey, conducted by FNB, highlights a significant disconnect between parents' intentions and their financial actions, with affordability, investment planning, and financial education identified as the primary obstacles.
Parents Struggle with Education Savings Plans
According to the survey, while the vast majority of parents are committed to their children's educational futures, less than half have established a dedicated financial or insurance plan to support that journey. Matthew Green, FNB life insurance product portfolio manager, points out that many parents are attempting to make provisions but are falling short by not utilizing dedicated financial planning and insurance products. This gap between intent and execution is a major concern, as it leaves children's education vulnerable to financial shocks.
A key factor contributing to this planning gap is a widespread misunderstanding of the total, long-term costs of education. Green explains that many parents only begin considering these costs once a child starts school and often limit their financial forecasting to the high school level. In fact, only 58% of parents factor tertiary education into their financial planning. This short-sightedness is compounded by education inflation, which consistently outpaces normal inflation.
As children progress through different phases—from pre-primary to primary, high school, and eventually tertiary education—the costs do not just rise; they experience a step-up level increase. Because many parents are only planning for the present, they are continuously underfunding the full educational journey. This underfunding can lead to significant financial strain when children reach higher education levels, forcing families to make difficult choices.
Reliance on Salary Income Poses Risks
When it comes to funding these escalating costs, the survey found that about two-thirds of families rely primarily on their regular salary income rather than dedicated savings vehicles. Green warns that this approach leaves a child's educational future highly vulnerable. If a parent's income is suddenly put at risk due to unforeseen circumstances, the family is often forced to cut other essential costs just to keep the child in school.
To mitigate this risk, Green advises parents to start saving as early as possible and to utilize dedicated savings products. Crucially, he emphasizes the need for ring-fenced funding. He explains that it is important to have ring-fenced funding for a child's future education, not a general pool, because those pools of funds may be used for other things and put the child's future education at risk. He also highlights the critical role of income protection insurance to ensure that a child's schooling remains secure even if the primary breadwinner's income is compromised.
Despite the challenges, the financial industry already possesses a wide array of sufficient investment vehicles to help fund education costs across various affordability levels. Green notes that FNB launched the Education Insights Survey specifically to spotlight this issue, as many parents simply lack the awareness or structure to utilize the tools available to them. The products exist across the market and are highly accessible, but the bridge between awareness and action remains weak.
Awareness and Action Gap Remains Wide
Green's primary advice for parents looking to close this gap is proactive engagement: reach out to a financial services provider to build a structured, ring-fenced plan. By leveraging the right investment vehicles and insurance products early on, parents can ensure that their strong commitment to their children's education translates into a secure, fully funded academic future.
The FNB Education Insights Survey underscores the need for greater financial education and awareness among parents. With education costs rising faster than general inflation, the importance of early and structured planning cannot be overstated. Parents who fail to plan adequately may find themselves struggling to afford their children's education, potentially limiting their future opportunities.
For those who have not yet started, the message is clear: begin now, use dedicated savings vehicles, and consider income protection insurance to safeguard your child's education. By taking these steps, parents can turn their good intentions into a solid financial foundation for their children's academic success.
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