Franc Takeaways

  • Investing in your child’s future is an opportunity to create a generational change in the way your family related to money
  • Raising children is expensive, so it’s important that you have saved up enough money to support their education and developmental needs
  • Teaching your children about the importance of investing is critical for ensuring their financial future
  • The best way to invest in your child’s future is to set up an investment account in their name
Tom tells the story of why he invests in the future of his two daughters.

Reason 1: Children are expensive

In South Africa, the cost of raising a child can vary significantly based on individual circumstances and lifestyle choices. The most recent Government calculations from 2022 suggest that raising a child for an average middle-income family from birth to age 18 could cost around R1,681,470 (excluding university expenses).

However, based on my own experience and asking other parents, essentials such as clothing, food, toiletries, basic medical care, and schooling can cost approximately R90,000 per child per year or R7,500 per month. Assuming an annual inflation rate of 6%, the overall cost of raising a child with monthly expenses around R7,500 would likely amount to around R3 million from birth to age 18.

Obviously, this figure is alarmingly high and should rightly scare most people. There are obviously huge variations depending on lifestyle choices and educational choices. However, most children are going to cost between R1.6 and R3 million per child.

Sadly, it doesn’t stop there. If you want to support your child to go to university, according to data from Old Mutual, the average cost of sending a child to university in South Africa was R55,900 in 2023. This cost is expected to rise to R95,700 by 2030 and reach R177,200 by 2038. So a 4 year degree in 18 years time will cost another R1 million.

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Expecting an addition to the family? Read our full guide to financially planning for your child here. 

No matter what way you look at it, children are expensive. The only way to support your child now and in the future is budget and plan accordingly. Start early to invest in your child’s future education and starting budgeting now so you can afford the cost of supporting your child’s needs.

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The benefits of starting early. That’s perhaps the single most important reason why investing in your child’s future as soon as possible is so important: it gives your investment time to grow and also makes it much more affordable! Read more about that in this blog post.

Reason 2: It’s an opportunity to educate them about investing

Few parents would argue that educating your children is not important. Education is important for children because:

  • It helps children learn how to think critically
  • It enhances their creativity and imagination
  • It exposes them to new ideas
  • It helps children find the path to a career that they wish to pursue as an adult
  • It provides them a chance to develop mentally, physically and socially.
  • It gives them experience and confidence to face the outside world.

Investing in your child’s development and future education is a financial necessity. That also includes the concept of educating your child about the importance of investing.

And what better way to teach your child about investing than by setting the example and including them in the journey? Experiencing the power of compound growth and how money that is saved and invested can grow is one of the most important financial lessons in life.

The best way to educate your children is through practical and real experiences. Here are a few ways you can educate your child about the importance of investing:

  1. Open a Franc investment account in your child’s name. You can open a Child Account on the Franc app simply and conveniently, and start investing for them in 2 minutes.
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Read more about why you should be investing in your child’s name.

2. Encourage your children to invest. Work out what portion of their pocket money or the money they earn can go towards their investment on the Franc app.

3. Show them how money can grow. Log into their Child Account together and have a look at how their investment can grow without their having to do anything.

Reason 3: You can give them a headstart in life

Children are the future. If you're already a parent or planning on starting a family, you should give some thought to how you can set your children up for success both financially and in terms of imparting a set of values and personal resilience that will give them a headstart in life.  

The more important values your child will learn will be from the examples experienced at home. If you want your children to be hard working, let them see you work hard and show perseverance. Being an example to your children when it comes to kindness, generosity and a good communicator is critical as a parent.

For many, getting a financial headstart in life can simply mean not being burdened with debt, but it could also mean having a nest egg for them to put towards further education and give them access to other opportunities. Investing and planning for the future is the best way to ensure that those future goals can be achieved.

The bottom line

In summary, while there are varying estimates, it’s clear that having a child is a substantial financial commitment. Whether you’re budgeting for essentials or aiming for a more comfortable upbringing, thoughtful planning is essential. You should see investing in your child’s future as an opportunity to teach your child about the importance of investing 🌟