Is this a financial mistake? Help please

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I have a 2 year old and have recently been gifted 80k. If I paid off some of my mortgage with this I would owe 150k. I’m 35.

The schools round here are absolutely awful. I can’t move area as I need family support so I have to stay.

Yesterday I looked round a private school which is 20k a year including vat. Me and ex are on good terms and he pays 1,200 a month. He won’t pay school fees but has said he will increase monthly payments to 1,500 if I choose private.

What would you do? I don’t have a high income my take home is 2,400. I am worried for dd and feel a bit lost with what to do. Please help!

You can only put 20k a year into an ISA. Any interest will be tax free but if you earn more than £1000 in interest from other high interest accounts, you will pay tax on the interest over the thousand.

Saying that, I’m no expert - this is just what I’ve learned from my own research. Might be worth paying for a consultation with a financial adviser to maximise your return on the 80k.

How much are the fees? Round here infant schools are like 20k and senior schools 30k so maintenance wouldn’t cover fees. Plus the offer of £1500 would probably be dependent on him keeping his job, not having more kids etc which is no guarantee.

As pp said, I would look at schools a short distance away (say up to 10 miles)

If I had to pay private then I’d prioritize secondary school.

80k wouldn’t last long if you wanted to privately educate her from the age of 4 to 16.

I would pay 60k off your mortgage and put 20k in to a stocks and shares ISA.

Then have a rethink about private school when it’s time for her to go to secondary.

You definitely can't afford to pay private school fees with 80k from nursery or even primary age. I would talk to a financial advisor about the least risk / most return for your money to invest for potential private schooling at secondary level. That could also include your savings and anything you can save from your maintenance. It's not just the school fees when you go private, everything costs more money - uniforms, PE kit and equipment, school trips, expectations of clothing / phones / pocket money expenditure / birthday parties etc because they're mixing with a group of friends who come from more affluent backgrounds.
Also bear in mind that state schools can change significantly in the 2-3 years you've got until primary and 9 years you've got until secondary.

No one can know what will be best for you without knowing about your mortgage or any other debts you may have.

If you still have a mortgage on a peanuts 0.5% rate, and no other debt, then £20k in Plum's ISA, and £60k in Chip's savings account (from MSE)

If you have CC debt up to your eyeballs, and on a 6% mortgage rate, then the advice is very different.

I definitely wouldn't be looking at private schools with that limited inheritance on your salary.

An ISA is not an investment per se. You need some decent financial advice if you're going down that route.

Personally I'd use the money to move to a better area.

Don't waste money on private primary school. You are not earning enough to comfortably afford it and in my view is not worth the precarious situation you'd be putting yourself in.

There's a whole lot of parental judgement about 'awful' schools based on not much logic, and often a big dose of snobbishness! I wonder if the OP was privately educated themselves? This sometimes seems to breed worries about the state sector. In most areas there are a few primary schools to choose from, and it's unlikely they're all awful. Schools are always a mixed bag of good and bad points, plus they change fast. One school near me had a poor reputation a few years ago, a new head came in and with strong leadership, decent behaviour systems, and support from parents things changed fast and now it's hugely oversubscribed. I think it's a bit early to be worrying about every school in the area being 'terrible' if a child is two. I became a school governor at my son's school, and it's a great insight into how schools operate, and a chance to help from within. Spending money on private education is such a waste, especially at primary level

Do you pay anything in to a pension? If so, why noy put at least some of it in to that. If not, then you should.

You can only put £20k per year into isa, look into flagstone for savings.
Private education is worth it in my opinion, but as others have said only once they get out of primary. Look around into highest interest rates, also as a gift you need to be aware if this will be subject to any tax, just check with accountant if you have access. You could end up having to pay some back - just to check without scaring you.

£80k would only pay for a few years of private, it wouldn't see them through from Reception to Year 6. Can you afford the fees after the £80k runs out?

I'd fill up yours and DDs ISAs every year for the next few years instead.

Honestly don't spend it on private school. That's my biggest regret

Pay some of your mortgage and have a nice holiday

This

Good luck OP 🤞

in order of priority

• pay off debts
• have emergency savings fund (3 months salary)
• reduce mortgage
• max out ISA in a tracker fund (not cash) each year until the rest of the money is in the ISA

don't bother with private school, especially at primary level. you can keep spare money for tutors / secondary school if it is needed later.

Neither. I'd invest half into S&P 500 and put half on a deposit on a property that you can rent out. The one day you can either sell the property or leave it to your child.

100% I'd pay it of the mortgage
Or use it to move to an area with better schools

Personally I’d try and relocate to an area with better state schools? School fees are a big commitment and who knows what the future holds for you or your ex earnings wise? Or if you will have further children potentially in the future? You could revisit private for secondary depending upon your circumstances.

Research the best state options and look at how you can make that work and invest the money.

I would plan on moving to an area that had good schools for secondary when your kid is about to start. As others say you can fill in rubbish primary school gaps and kids can catch up at high school. You're also not likely to need the family support as much as you do with a two year old.

In the meantime with the money, unless you have a reason to believe your house or area will not rise with house price inflation of the area you want to move to, overpay your mortgage to reduce the amount of interest you will end up paying over the whole term.

Have you visited any of these schools.

Sometimes the school with the outstanding OFSTED rating isn’t the best school for your child.

I chose a school that was in special measures for DS. (After I had to pull him out of an OFSTED Outstanding school). People I knew looked at me with pity when I told them which school DS attended

It was the best school because although the OFSTED rating and reports were dreadful, they didn’t reflect what happened after the Ofsted inspection. The new HT was given a blank check to turn this school around and to hire new teachers and spend money where needed

The playground was overhauled and was that amazing. A chess club that did tournaments with all the other schools in the area. (Including the private schools) etc

When DS left just a year later DS attended a large comprehensive (with 4 others from his primary school class.
Year 7 intake 270 pupils
They first tested in all subjects to get to know which class level pupils should be placed in

The 5 children from DS’s primary school who attended took the first 5 places with only 3 points between top and 5th in Maths.

I would keep an open mind on the schools and would do a visit to see if any actually seem better or worse than the Ofsted rating.

Schools can change dramatically between inspections

Tge Outstanding school that I pulled DS out of went into special measure only a few months later

This is good advice.
It's also worth saying: investing vs paying down the mortgage is a false dichotomy. Paying down the mortgage IS investing. It also reduces your outgoings. The money is not gone - it is still in the equity of your house.
Those saying use the money to fund a move to an area with better schools also make a valid point.
Lastly, 80k is not enough to fund your way through private school. Friends and ourselves have paid for private schools and most of us say with the way fees have gone, and knowing what you get, we wouldn't do it if starting now.

It's only worth using the lump sum to reduce the mortgage if (1) You like the idea of reducing debt, A LOT, OR (2) The interest rate is very high, and higher than you'd get in a savings account or other product. Otherwise, paying off the mortgage reduces your flexibility (unless there are easy means to borrow back).

With a bit of looking, you can get 4.5% or so on savings accounts (e.g. Hargreaves Lansdown Active Saver). You could use ISAs before & after April to invest £40,000. If you don't mind Apps & exotic providers, then online ISAs can get closer to 5%. Premium bonds (up to £50k) would average 4%, probably closer to 3% in practice unless you get lucky. So, not worth paying off mortgage unless the interest rate is above these kinds of numbers -- which, of course, it might be!

If your child is 2, then you have a few years to think about things. You might get a higher return with shares/ISAs, but 3-4 years is too short to be rising that.

The main thing I'd say in favour of private schooling is it doesn't cost much more than nursery places, if you're used to paying for them! (maybe not if using local family support).

You can’t afford private school- the £80k will soon be gone. I’d use it to move to somewhere with good state schools.

Put 20k in ISA and some in PB and some in mortgage. There is enough to spread. If you comfortably pay your mortgage I would invest more and put less in mortgage.

Paying off part of your mortgage is an investment. Paying for private school fees is not.

Not to mention that by the time your child starts school in 2-3 years, it won't be £20k - it'll be more like £24k. And by the time they finish Infants, it'll be pushing £30k. Plus the school uniform and the extras and any wraparound care...