The affordability question again

[yamyam89]

Hi all, I know this is a question asked many times over, but ...
We are interested in sending our two children (baby and toddler at present) to the local independent school. My salary isn't enormous, £65k, but I am doing an MBA (paid for by work), so hope it will go up. My wife isn't working at present. We've had a lump sum settlement and so have £1.5m sat in investments and £1m put aside for a house. We could spend less of course, but this is kind of the ball park for a 4 bed detatched in our part of the country, which is what we would ideally like.

My wife does plan to return to work when our second child is in school, and when working her salary was ~£70k. Fees still feel like an enormous amount of money to me. Our financial adviser says it's doable, but I'd like to hear other people's opinions. Our local primaries are very poor, and the local independent school has a great reputation. I didn't attend a private school but my wife did, and admittedly did benefit greatly from it (I know her salary / work situation might not show that at the minute, but life intervened - she was on a great path beforehand). Life has been very hard for a long time, and I am finding it hard to be an optimist or make big financial commitments despite receiving this lump sum... I'd really welcome any thoughts... thank you!

Move house to a better area, it would be a better idea than committing to private. Second option is pay for private secondary, not primary.

have £1.5m sat in investments and £1m put aside for a house.

So you can put the 1.5 investment towards school fees for all the years? Seems fine if that is what you want.
Speak to your financial adviser.

I would love to an area with better state schools so that you have a back up plan if private doesn’t work out or one of you can’t work.
The private school may be fab but I would hazard a guess that it’s not great for all kids. What I mean is if your child is sporty then private is often better because there’s more PE lessons, chances to play a bigger variety of sport etc or if your child is academic then a school with other academic children is going to help them zoom on ahead. If your child is different from the sort of kids who attend the school then the private school may not be right - a child who is competitive may not fit in with a gentle and nurturing school or a child who is not sporty will not appreciate the increased sport (especially contact sport like rugby) Impossible to tell at 4 but by 7/8 you will know.

A decent state allows you to join the private system later and save for secondary which is much more expensive. You’ll find it easier to pick a school that suits your child so any adjustments to your lifestyle will feel easier.

On your wage alone you’d be able to send 2 children to my local independent, depending on outgoings obviously. How much are the fees?? I would say that the school fees for my local are around what the average person pays for a monthly mortgage repayment.

£4.5k per term, plus add ons of course, going up as they move from infants to juniors etc. Over primary, secondary, and 6th form for two it just seems a huge sum, even though we love the primary school. Thank you for the reply!

Your wages definitely wouldn’t cover fees in London at £20k pa upwards.

Do you want to spend your £1.5m in investments on fees?

You know your bank balance, you know the cost of local housing, and you know what local private schools cost. Your financial adviser says it's fine. What answers are you seeking here?

Yes that's right. I just didn't see school fees as a possibility previously and though we have the money and a financial adviser, I am an extremely cautious person and really value perspectives from others, thank you

Dont rely on your wife getting the same wage or more that she left. Gender and age discrimination means her earning potential will be far less now she's older and a mum.

I can’t see how it wouldn’t be doable just would depend on your house purchase plans and monthly outgoings. That’s only slightly more than our local independent. Personally if you can afford it I think it’s worth it, yes even for early years. The state schools in our area are not very good. Lots of unhappy kids around.

That's a good challenge - I guess my salary seems low compared to most people posting on here and such a large outlay over many years feels exceptionally daunting. Having had a very difficult decade prior to this with litigation, I am finding it difficult to be optimistic. I probably need therapy!

Thank you for your insight, I really appreciate it

You've got half a million pounds left over after buying a million pound house presumably outright with no mortgage. The basic maths say you can easily afford it.

If your £1.5m investments get a 5% return that's 75k per annum (before tax). That'll help.

Not sure why you need to ask.

My DH’s salary is what you and your wife make (used to make in your wife’s case) combined. I’m currently not working but I have been told in order to send our DC to independent schools from reception to sixth form that I should return to work, when the time comes. My DH believes we won’t be able to afford it if I don’t. Our DC currently has a place at a pre-prep.
Given that, I think it would be too much of a stretch to send your DC to indies on your salary alone. You will almost certainly have to dip into your investment fund – at least if you live in London or the South-East. I personally think it’s worth it.

I think the lump sum settlement (i hope it wasn't for medical negligence) has changed things for you. You literally have 2.5 million to do what you like with.
Think carefully about purchasing a house - apparently not the best financial investment unless you are set on having a fixed abode you can be in control of.

Total cost: The average cost to send a child to private school for their entire schooling life is around £350,000 for a day student
According to AI
If you want to spend your entire investments on school fees you can.
Your annual income will cover day to day expenses.

Is it best use of the ££? Only you can decide

Yes of course you can afford it, easily. You’ve £2.5m and likely £1.5m in investments after you’ve bought a house without a mortgage. Your capital will still increase.

Presumably you could release income (interest/dividends) from the 1.5m investments to pretty much cover the school fees and not reduce the capital that much. You’d also have a mortgage free house, plus a decent salary to cover your living expenses and potentially your wife’s decent salary too?

Apologies if I’ve misunderstood your financial situation, but I think if the above is true then yes you can afford private school fees if that’s what you wish to spend your money on

1.5 million invested at a conservative 5% is going to yield £75000 a year. You will probably get more. Even after tax the growth alone will cover the fees leaving the capital sum untouched. I think you need to sit down with your financial advisor and go theough the figures. There are specialist school fee products. You will be absolutely fine.

https://featherstonepartners.co.uk/school-fee-planning-guide/

You have £1.5m in investments so yes you can afford it. Lots of posters will say you can't and you need £300k salary at least etc etc but we have a joint salary far less than that and manage it. And don't have investments of £1.5m. You cut your cloth and prioritise fees over fancy cars, holidays etc if that's what you want to do.

Yes I think the 300k salary crowd is more aimed at those with vast mortgages and nowhere near 1.5m investments. That is not your situation. Your income may be lower but you have a huge amount of capital that can be used wisely.

You are in a better position than probably 95% of the population.

You have a regular income. And then plenty of investment choices with the 1.5M. Diversify. Invest globally. For example investing a multi asset income fund will get you around 7-8%. Minus tax afterwards of course. Don't put 1M cash into the house. Buy a 1M house but leverage. Put down 30%, do a interest only for a few years, invest the 700K into a high yielding investment and use the part of the income to pay the mortgage and reinvest the rest. Downsize later when the kids are older. Grow the 1.5M and then when needed start to use the grown capital. But do ask a financial advisor. Going to a day school rather than a boarding school will be cheaper.

Agree with above poster - don't put £1m cash in house. We do the same re high yielding investment and use part of income to pay mortgage. Now that VAT has come into effect, we estimate £50k for 2 kids this year including cost of uniforms/trips/instrument lessons etc (we are based in London). I'm sure someone on here has mentioned annual school fee increments. If ur extremely cautious, use 8-10pc as a guesstimate for this. I don't think the VAT will go away but some schools have been able to absorb some of it. Good luck with your decision!