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!

Pay down the mortgage - that will increase free income to pay for tutoring.

coukd also consider 6th form for private with longer time frame to save. Whats your postcode- you may find that unis may give lower offer if in a certain quartile.

Buy a smaller/cheaper house in a good area/good school area.

Agree with PPs - your child will be fine at a state primary. Unless your local schools are full of drugs and violence then I would save your money. If you feel she needs private for secondary then save for that, I think that is where you really get value for the money.

But do look into your local secondary schools in detail. If you have other children by the time your LO starts secondary - then what?

Don't spend your money on private education - why would you?
Send your kid to the nearest best primary and put your effort into backing them up with reading, homework etc.
Do the same with secondary and you can put that money towards their deposit.
I'm forever surprised at the thing on Mumsnet that private is better somehow than state.
We have 3 kids who all went to state schools, despite an offer from a relative to pay for private.
That didn't sit well with us and our values.
We don't live in a posh area at all, just chose the schools that suited our kids and they were happy with.
They've all done very well, youngest despite all the acronym disabilities you could name, about to get a doctorate.

Oh, and we both worked full time so no sahp

Private primary school education is a waste of time- primary school is just t get them reading and writing and adding up, even if they are awful in your area a little extra tuition will bring DD up to speed.
I would invest the money for her future- if the investment goes well you may be able to afford private secondary school for her, if that seems needful, or it could help her onto the property ladder.
Taking home £2400 per month, with your ex paying £1200 in per month means you should be overpaying your mortgage substantially every month already, as you have £3600 coming in and can't be paying much more than £1200 on your mortgage.

Best savings accounts: 5.1% easy access or 4.77% fixed rates https://search.app/dHpZmQ4A7WpDUDGu8

Chip has a savings account 4.85% with 3 withdrawals a year or 4.71% unlimited withdrawal. The interest will be nearly 4k a year if you put the 80k all in.

You can’t afford private school. Simple as that.

You also can’t afford to make that big of a financial commitment for 13+ years of school based on your ex. His circumstances can change. What if you or he has more kids?

Knock some off your mortgage, start a junior isa/child trust fund for your kid, put some in pension savings for yourself, have a small emergency fund in case you lose your income.

If you definitely want private then I’d wait for secondary and try to save a lot more in the next 8 years. If it’s £20k per year you only have enough for 4 years so you’d need to find another £20k from somewhere at least and that’s not allowing for extra like school trips, uniforms, etc.

I would split it. 20k initial investment into a combo of all world and American tracker stock. 60k in an offset mortgage account. DCA the offset into the stocks tracker as you get more comfortable with it. Start with 1-2k a month then year 2 maybe 2-3k.

Get up an investment calculator. Have a look and you will be amazed at the power of compounding.

Kindly, you can’t afford private school. Instead, set aside some money each year to ‘enhance’ the local school - tutoring, a music instrument/lessons, excursions out to interesting/educational things (as she gets older) and invest time in taking her to the library, reading to her and fostering a love of reading and books. This will set her up well for primary. THEN in 6 yrs time, you might make different decisions for secondary school - moving, scholarships, or going private for those years.

So, for the £80K money now, I would:

1. Set up an Emergency Fund. Calculate 3-6 months worth of bare-bones expenses, and put in a high interest savings account, not to be touched. The interest you earn each year should cover cost-of-living inflation, as things increase. As you are a single parent I would opt for the 6 months, not 3, as you have the responsibility of a daughter and no second income coming into the family, so things are a little more precarious.
2. Pay off any consumer debt - credit cards, your overdraft etc and close them(or cut your credit card limit back to £1000 or something small, if you must have one.
3. Keep between £1000-5000 in an account marked ‘holiday’ and plan a nice holiday for you and DD, perhaps not now, when she is too young to enjoy, but when she is a bit older. The amount here would depend on how much I had already paid into the first 2 categories. If you already had an Emergency Fund and no consumer debt, put the whole £5K. If you have already used a bit to fund the above, make it £1k or a preportion in between.
4. Rest of the money in the mortgage. This will help in many ways - bring down the time it takes to pay it off, eg - in 16 years time you may have paid it off and will have that extra money from your salary to help DD with uni costs. Or if it reduces to 10 years left, you’ll have it paid off by the time she is in secondary and can consider if you could pay for private fees with the extra money. Or even if it’s not for another 20 years until DD is 22, you could use the extra money to save for a house deposit for her. Or just enjoy the money yourself! Also, paying more off your mortgage now will help you remortgage later (between LTV) and could put you in a better position (more equity) to move in 10 years time if you need to for DD’s secondary school.

That’s what I would do in your shoes, and you can re-assess schooling in a few years time.

You need to remember it’s not your money it’s your DC. you can invest it on their behalf but it needs to be in their name not yours. You need to get some professional advise from a financial advisor as they should be able to tell you what you can and can’t do. But it is NOT your money it’s your DC so you can’t pay off your mortgage. You are the trustee for your 2 year old DC money. You have a legal duty to look after it and invest it for them. If in years down the line they find out (which they should) that they were given £80k and you don’t have it to give to them you can be prosecuted. Be very careful!

Pay down your mortgage; private school is not affordable or the better option.

reduce your mortgage, if you don't have accessible emergency savings, keep back maybe £10k for that.
Overpay the mortgage (or continue to pay at the same rate after paying off a chunk) As you'll have more equity, consider moving to an area with better state schools.

Don't spend it on private school. Move to an area with better schools.

If you put the 80k in an MCSCI World Tracker Fund and it returned it's historic average 8% return, 50k invested today would be 180k when she is 18 (tax would reduce the compound on this so it would likely be less unless you find a tax efficient way to do it). But that would pay for university and pay for a house deposit for her.

I think you need to re-read the OP. At no point does she say that this is her DC’s money.

As such your advice is incorrect.

In your position I wouldn't be considering private school.

I know you say you need family support but I'd be looking at schools slightly further away (with good wrap around care) with the view to move.

If you paid the £80k off your mortgage you would be around £500 a month better off, so start from there. OH is chipping £300 in, so all things considered you are £10k a year short.

If you can find that out of your outgoings, then go for it. If you can, then don't. If the schools are bad, hire a private tutor for £500 a month you are saving on your mortgage, and you're then getting the best of both.

Pay it into your mortgage for long term security.
there’s also the option of putting some into a junior isa for your dd, maturing when she’s 18, this means there’s money there for driving lessons, college or uni or to help her travel when she’s older.
you could also keep some money aside for extra tuition.

No offence to anyone here but you probably aren’t best served by asking Mumsnet for investment advice. Find yourself an independent financial advisor

Gently, It isn't just about the fees and VAT. It's the school uniform, books, school meals,, it's the sports kits, the after school clubs and the opportunities to go on trips the other thing is that VAT isnt going to go away. The current government is also hammering employers with employee NI. I had budgeted for a 10% increase in fees when my kid started private school (and i could only go from p7 as due to stupid financial decisions, i didn't have the right budget till them). I am now looking at a budget of 15% increase to fees year on year plus the VAT. If i get anything less than that as an increase, it is a bonus, anything more, well, it's beans and bread for me, not toast! You need to look at some serious budgeting (excel will be your friend) both now and forward planning to see if you can afford to do this because the last thing you want to do is rip your child out of a school she loves as you can't afford it. In addition you need to look at your own standard of living. What if mortgage rates go up, do you have other debt that needs to be serviced, how many years do you need to fund schooling for, can you still go on holiday or are you happy to sacrifice that for her education (no judgement here - our holidays are butlins and its not happening this year!). Also look at what happens if either you or dad loose your job or if dad can no longer afford to pay £1500 a month. If private education is what you want to do, then stick the £80k in a high interest account and use it to cover extras and shortfall. Also look at whether bursaries might be available- again labour have screwed this with the VAT as the amount of bursaries are reducing and only normally available for secondary education. Good luck with your decision making.

I would think about what the child might want when grown, I think some money towards uni or a house deposit would be of so much more value to them. And also the money will grow over the years in savings interest. Unless they really struggle with learning they will likely be absolutely fine in regular school.

You don’t need a private education. I paid for tutors for my daughter (only from secondary onwards) with me
supporting during primary with reading, writing and maths. She’s doing GCSE’s this year and predicted all 8’s and 9’s. It was much more affordable than a private education and left us more money for holidays and general savings which will hopefully help her when she needs a deposit for a house or uni support.

Invest the money in tax free ISA's and/or high yield interest accounts - this will work out better than chipping away at the mortgage. Maybe look into private education for the 6th form if you still want to go down that route then.

So your mortgage currently is £230K? It's a big mortgage for a single parent, even with maintenance income. As others have said, what if his/your job changes, he gets a new partner and reduces payments (particularly if he's not onboard with private education),illness, etc. I'd want to pay that down asap and reduce the mortgage outgoings. You can then save the difference into a high interest account.

An independent school is far more likely to make a difference at secondary school age. Even better, move to a grammar school area if there is one nearby. Use some of the saved mortgage payments on enrichment; music lessons, encouraging sports, travel or tutoring.