Education is one of the most meaningful investments a parent can make. It's also one of the most expensive — and the costs keep rising faster than general inflation. Starting early makes an enormous difference.
Education costs in South Africa have historically inflated at around 8% per year — roughly double the general inflation rate. This means the fees you see today will be significantly higher by the time your child reaches university. A degree that costs R80,000 a year today could cost R170,000 a year in 10 years if that trend continues.
The good news is that compound interest works just as powerfully on the money you save as education inflation works against you. Start early and the two forces roughly cancel out. Start late and the gap becomes very hard to close.
This depends on which school your child will attend and when they'll start. But let's look at a concrete example using the ClearCents calculator.
| Return rate | Monthly contribution | Value at age 18 |
|---|---|---|
| 8% per year | R500 | R239,000 |
| 10% per year | R500 | R306,000 |
| 12% per year | R500 | R396,000 |
Starting at birth with R500/month, a 10% return produces over R300,000 by age 18 from just R108,000 in total contributions. Compound interest does the rest.
| Return rate | Monthly contribution needed |
|---|---|
| 8% per year | R2,150/month |
| 10% per year | R2,010/month |
| 12% per year | R1,880/month |
Starting 10 years later requires four times the monthly contribution to reach the same target. Time is not recoverable.
This is often the best starting point for education saving. All growth — interest, dividends, and capital gains — is tax-free. The annual contribution limit is R46,000 per year from 1 March 2026, with a lifetime limit of R500,000. You can open a TFSA in your own name and earmark it for your child's education, or open one in your child's name. Note that contributions to a child's TFSA count towards their personal lifetime limit, which may matter later in life. Read more about TFSAs here.
For longer investment horizons (10 or more years), a diversified unit trust or exchange-traded fund offers the potential for higher returns than a savings account. Low-cost index funds tracking the JSE have historically produced strong long-term returns. The key is to start early and stay invested, even when markets are volatile.
Some parents use endowment policies for education saving. These are long-term insurance products that can offer some tax advantages for higher earners. They typically have minimum terms of 5 years and may have higher fees than a direct unit trust investment. Consider getting independent financial advice before committing to one.
Several South African insurers offer products specifically designed for education saving. These can include premium waiver benefits (the policy continues paying if the parent dies or becomes disabled) which can make them valuable for families where the saving is dependent on a single income. Compare fees and returns carefully before choosing one.
For shorter timeframes (under 3 years), a fixed deposit at a reputable bank is a low-risk option. Returns are lower than equities but the capital is protected. Useful for money you'll need soon and can't afford to lose.
The earlier the better. Even small amounts invested from birth benefit from 18 years of compounding. R300 a month from birth at 10% grows to over R180,000 by age 18. The same R300 invested from age 10 only grows to around R65,000.
As your income grows, increase your contribution. Even a 5% annual increase makes a significant difference to the final amount. Set a reminder each year to review and increase.
Open the calculator, switch to "Required contribution" mode, enter your target amount and your child's age, and set the term to the number of years until they reach university. The calculator will show you exactly what you need to contribute monthly under different return assumptions. You can model three scenarios side by side — conservative, moderate, and optimistic — and find a number that works for your budget.
It's tempting to dip into education savings when other expenses arise. Having the money in a dedicated account — ideally one that requires some effort to access — helps protect it. A fixed deposit or a TFSA with a reputable investment platform works well for this purpose.
University costs go well beyond fees. Accommodation, textbooks, transport, and living expenses can easily double the cost of a degree for students who don't live at home. Build these into your target amount.
Starting late is better than not starting at all. Even if your child is already in high school, saving for a few years builds a meaningful contribution to university costs. Increase the monthly amount as much as you can afford, use a higher-return vehicle if your timeframe allows some risk, and be realistic about how much of the cost you can cover versus how much your child may need to fund through loans, bursaries, or work.
Use the ClearCents calculator to work out exactly how much you need to save for your child's education. Switch to "Required contribution" mode and enter your target and timeframe.
Open the calculatorThis article is for educational purposes only and does not constitute financial advice. Fee and cost figures are illustrative and based on publicly available information. Actual costs will vary by institution and year. Please consult a registered financial adviser before making investment decisions.