Let’s make it about R50 000 a year in university and accommodation fees? Much more if you want them in a top private school. Just honing their skills in music, maths or macramé could leave you thousands out of pocket.
To realise your offspring's huge potential will involve money – which few of us will have available at the drop of a hat.
The earlier you start putting some cash away the better. But where?
1. Savings accounts.
You can open an account in your child's name, although it might be a bit more complex than you think. The Financial Intelligence Centre Act requires financial institutions to verify your details thoroughly to prevent money laundering and identify theft.
You probably will need a legal guardian affidavit, which has to be signed before a Commissioner of Oath, as well as a copy of your ID, utility bill (as proof of address), an affidavit that you child lives with you and the original birth certificate.
In the long run, buying shares in listed companies will grow your money best – beating savings accounts and property. In the short run – like last year, when the SA stock exchange lost almost a quarter of its value – it could break you heart.
Traditionally, though, the market recovers within a couple of years – and you should have time on your side.
3. Unit trusts.
Unit trusts (often called "funds" or "collective investments") pool many investors' money together to buy shares. You don't earn the shares, but are allocated units in the fund. You can open a unit trust account in your child's name.
4. Exchange traded funds.
These funds are passive investments – they aim to mirror a specific index on the bourse. The Satrix 40 fund, for example, will only invest in the forty biggest shares of the JSE. Satrix, which is an initiative of the JSE, is the best known in SA.
5. Life insurance.
It may sound unsexy, but a life assurance policy is the one investment you must have.
Before you do anything else, make sure your children are provided for in case something happens to you. Not only should it cover all your debts (including your house), but also provide for their education.
This isn't a way to grow your money really, more a (sometimes) tax efficient way to transfer big amounts or even properties to your children.
Transferring your assets to a trust will reduce the size of your estate, which means less tax. Your child, who falls in a lower income tax bracket, can be registered as a taxpayer.
You determine the trust rules: when the child will get access to the assets.
If you are unsure of how to start saving for your children – as well as about your own financial health and prospets – consider talking to an accredited financial advisor.
For personal finance news and advice, go to Fin24.com.