There are no two ways about it, private schools aren’t cheap. Sending your children to private school is an investment, an investment in their future, but don’t get scared off by the inital sticker shock. A private school education may actually be easier to fit into the family budget than you think.
Here are a few tips to make private school affordable.
Review your family’s overall finances and determine what’s most important to you, before you begin researching individual private schools. Think about how the expense of private school will affect your family 5, 10, even 20 years from now.
Would private school mean you can’t retire at age 65? Is sending your child to private school more important than taking an extravagant vacation every year? There are no right or wrong answers, but it is helpful to get your priorities in order.
Here’s how you can establish priority:
The first thing you should do is to determine your current household income and the percentage that’s going towards things like mortgage loans, car loans, utility costs, and insurance costs. The general rule of thumb is that half of your income should go towards these costs, while 30% should go towards discretionary items. That leaves you with about 20% for savings.
Next, check to see if you have enough in your discretionary expenses to pay for tuition. If there’s not enough money available in that area of your budget, you may need to sacrifice some of your spending to make room in your budget for private school tuition.
However, if you have to use savings because there aren’t enough discretionary funds available for tuition, then you must carefully consider what’s important. What have you been saving for? If you were saving for a big vacation or for a new car, then you might be able to put that off for a bit longer in order to pay for tuition.
If you were saving for a new house or for retirement, then you might want to crunch the numbers and figure out how much longer it will take to reach those savings goals once you add in tuition to figure out if it’s worth it for you.
Your financial goals are unique to your situation, so figuring out how to pay for private school tuition is dependent on your financial priorities. Just remember that you don’t want to spend every cent you earn on bills and tuition since you should have some money put away for any financial emergencies that come up as well.
Education Savings Accounts
The Coverdell education savings account (ESA) is similar to the 529 in that it allows tax-free growth on investments and tax-free withdrawals on qualified expenses, such as tuition and books. Where they differ is that Coverdell ESAs allow you to save for college purchases, as well as K-12 expenses.
Another big difference is that Coverdell ESAs limits contributions to $2,000 per year, per child, so it’s important to start saving early. There are also some eligibility requirements, such as income and age caps. Learn more about the Coverdell ESA here.
Basically, by opening up an education savings account, you can contribute part of your paycheck before it is taxed. That money can then be used towards tuition without being taxed, so in essence, you’re getting to keep money that would normally be paid towards income tax so that you can use it towards tuition instead.
In 2012 Virginia enacted the Education Improvement Scholarship Tax Credits program, which makes it easier for low and middle-income families to afford private school. The program provides scholarships to families who are within 300% of the federal poverty line. Donors may take a tax credit of 65% of a donation against state taxes. For information on how to apply and more details, see the Virginia Department of Education.
Sacrifice may be a component of your plan to afford private school. Many families find savings by changing their everyday living habits, such as eating out less, shopping in bulk and cutting back on cable and cell phone plans. Other areas that you can find savings include reducing vacations, buying a used car over a new car and delaying home renovations.
A lot of these expenses are discretionary, which means you should be able to reduce them if you’re careful or even eliminate them completely. One of the best ways to do this is to simply sit down and figure out what you spend your money on.
For example, take a look at your cable bill and the various packages you pay for. How much TV do you actually watch? Many people have started reducing their cable package or eliminating their cable altogether, choosing to pay for one or two streaming services instead, which can save a lot of money.
You can also save money on transportation by carpooling with coworkers, by riding your bike for nearby errands or by choosing to take public transportation to work once or twice a week. This can save a significant amount of money on gas and help reduce the wear and tear on your vehicle, which can help prevent the need for repairs.
Buying your groceries in bulk and eating out less can also help you save money on your transportation costs since you won’t have to drive to a restaurant or to the grocery store nearly as often as you once did.
If you tend to buy a lot of small things, like movies, music, books and video games, then you should consider stopping this habit as well. While it may not seem like you’re spending that much on items such as these, such costs do add up over the long term.
If you sit down and take a close look at your spending, you’ll be surprised at all the opportunities you have to save money. That’s not to say that they’ll be easy choices. It may be tough (at first) to give up that coffee every morning, or to decrease your budget for holiday gifts, but once you see the amount of money you’re able to save for school tuition, it can actually become fun – almost like a game.
Help from family
Many grandparents, aunts and uncles are happy to help pitch in on a child’s education. Grandparents often plan to leave an inheritance to their grandchildren, but contributing to their tuition allows them to see the benefits of their gift and witness the difference it makes in the kid’s academic, social and behavioral growth.
If your children’s grandparents are unable to help out financially, don’t be afraid to go your brothers or sisters. Uncles and aunts are often quite fond of their nephews and nieces. They’ll often be more than happy to help out, especially if they don’t have children of their own to pay for.
However, if your family simply doesn’t have the disposable income to help you out, you could ask your children’s grandparents and other family members for help in other ways.
For example, you might ask them to watch your children while you work another job. Or, you might try doing large family meal nights a couple nights each week; you’d be surprised at how much money you can save by doing larger meals (just make sure your family members can pitch in on the cost!).
Find your way to afford private school
Once you have developed a plan to finance a private school education you’ll need to find the school that’s right for your child. See some tips for researching private schools and questions to ask when touring a school here.