In this highlight from our newsletter we're looking at the importance of starting to save early to support your children's education.
For many parents in Ireland, funding their children’s education is one of the most significant financial commitments they’ll ever face. Yet, it’s also one that can easily sneak up on you. The earlier you start planning, the easier it is to manage the costs, and to ensure your children have the opportunities they deserve, without undue financial stress.
The Real Cost of Education
Education in Ireland is often described as “free,” but the reality can be quite different. Between books, uniforms, fees, accommodation, and day-to-day expenses, the bills quickly add up.
Secondary level education
At secondary school level, parents typically spend around €2,900 per year on costs such as books, uniforms, extracurricular activities, voluntary contributions, transport, lunches, and grinds. This is significantly higher than some traditional estimates, with total costs over six years potentially reaching about €17,500 per child. These costs include grinds (~€825), lunches (~€429), and transport (~€237), all major contributors to the total annual expense.
Third level education
According to recent studies a student living at home costs an average of approximately €6,100 per year.
A student living away from home can cost between €14,000 and €14,500 per year, depending heavily on accommodation and location.
For a four-year degree, this means you could be facing total costs of roughly €24,500 to €58,000 per child and that’s before factoring in inflation or potential postgraduate study.
Government grants and scholarship programs are available and can help reduce costs, so it’s worth exploring these options as part of your planning.
Why starting early matters
Being proactive is the key. Starting a savings plan early allows you to spread the cost over time and take advantage of compound growth. In other words, your money earns a return, and then your returns start earning returns.
Leaving it too late often means having to draw on income or borrow at a time when other financial pressures, such as mortgage payments or retirement planning, are already in play.
The message is simple: a small, regular contribution today can make a big difference tomorrow.
The limitations of traditional savings accounts
While it’s always wise to have some funds set aside in an accessible savings account, relying solely on traditional deposits is rarely the most effective way to grow education savings. Interest rates on deposits remain low, and when inflation (currently about 2.2% annually for education costs) is taken into account, the real return can be negligible.
Let’s look at an example:
If you save €250 per month for 15 years, you’ll contribute a total of €45,000. At an average 2% annual return, your savings could grow to around €52,000. At an average 4% annual return, your fund could reach roughly €61,000. That’s a difference of €9,000, achieved simply through a higher long-term growth rate and 4% is not something typically achievable at present through standard bank deposits.
A smarter way to save: Regular Savings Plans
A Regular Savings Plan with a leading life company offers a flexible and effective alternative. These plans allow you to invest a regular monthly amount (often as low as €100) into a range of professionally managed investment funds tailored to your timeframe, goals, and attitude to risk.
You can increase or decrease contributions as circumstances change, and access a wide selection of funds from cautious, low-risk options to more growth-oriented investments.
Over time, this approach allows your savings to work harder, with the potential for higher long-term returns compared to deposit-based saving.
Crucially, with a regular savings plan you retain flexibility: you can pause contributions, make lump-sum top-ups (note minimum lump sums may apply), or adjust the plan as your needs evolve.
Regular reviews are key. Once your plan is in place, it’s important not to set it and forget it. Regular reviews ensure your savings remain on track, reflect changes in your circumstances, and take account of market conditions or new opportunities. We recommend reviewing your plan at least once a year to make sure it continues to meet your objectives.
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