Can we afford private school?

[Minimalistmamaoftwo]

Hi,
I want to get a sense of whether we can afford to send our 2 (potentially 3) children to private school.
Ideally I would want to send them from 8-16. We currently have a household income of £100k, I am at home with the children. By the time my eldest is 8 this should be around £180k due to my husbands guaranteed promotion and me going back to work. This should rise to around £220k around five years later and probably peak there. We also have two properties worth around £450,000 with equity of £300k which currently net us £13,000 a year in rent. We also own our own (mortgaged) home. Fees for the schools in our area range from £10-17,000 per annum.
Is this manageable? Many thanks

At 220k salary your take home is only around 130k. It's affordable if they're not all at school at the same time. If you have to pay for 3 sets of school fees concurrently it's going to be very tight, although you could afford it if you sold your properties.

We are in a broadly similar financial position now to what you expect to end up at. We have 1 DC at private school. If we had 3 our lifestyle would be severely curtailed. It’s not something I would do.

We’re also not in London/SE but fees for senior schools are now nudging over 20k and getting higher. If you budget for 25k that means 75k pa for all 3 which is the thick end of 150k pre tax income every year. That’s a lot to commit to.

I guess these are the two sacrifices we need to consider which would make it much more affordable. Either don’t have another child, the rental income would cover fess for our first and we would then easily be able to cover fees for our second from our salaries or have three but sell both properties in four years when my eldest is 8 thus freeing up enough to fund the majority of their education outright. Alternatively having three and keeping the properties but accepting no holidays or other frivolities, it’s difficult

Those fees are low. Is it a genuinely good school?

It’s a big gamble. £100k is “only” £5.5k per month and school fees at that age can be around £1,600+ a month, x 2 that’s £3,200. That’s before all the additional costs of school trips, uniform, lunches etc.
then you have your mortgage and household bills to pay.
Don’t forget most private schools increase fees every year by 5-6%!
Re your BTLs, don’t forget you will have to pay capital gains tax when you sell and also the ball ache of selling them, it’s not immediate access to cash when you need it. It’s a long term commitment cos you don’t want to find that you suddenly can’t afford it half way through their school careers.

l have 2 rental properties and all of the rental income is used to pay tax and maintenance so we don’t even break even! Need to sell both but tenants are single mums with kids in the middle of school. I wouldn’t rely on rental income.

How did you manage to have 3 homes on your salaries!

Personally I would use the equity for the fees, it's security.

That’s very low for private school! My child’s old school (she’s at uni now) is now £31,500 with the VAT added.
Fees tend to go up about 5-6% every year. Uniform and trips tend to be more expensive too, so factor that in. Secondary more expensive than primary…

For those querying fees these are very standard for the area, the most expensive I can find is £19k and they offer boarding. These are all well established schools, I actually went to one of them myself and every the one at 9.5 gets excellent results but is very small and that worries me.
@sharkanado I worked in a tax haven for seven years before I had my children and my accommodation was included in my contract, I literally couldn’t spend my money. I bought two rentals and saved a large deposit for a family home before I was thirty which was the best thing I could do because since I have had children my brain is like a sieve 😂

£13k is the net rental income, we take £24 across the two per annum

That makes sense. good saving!

I actually went to one of them myself and every the one at 9.5 gets excellent results but is very small and that worries me.

I would be worried about financial viability tbh.

This was me a few years ago. Then I got laid off and haven’t found work yet. So my child may be going to state this year.

It was all good until it wasn’t.

We are downsizing our house now to afford private school. We will put the amount of about £250k to cover 4-18 into a bank that pays about 4-5% interest to cover any fee increases. That way we know we can afford it and pay for it regardless of what happens with our work etc. Don’t think we will prepay in case DC doesn’t like the school etc.
we have insurances to cover other life events that may occur.

This. If you’re betting £13,500 after tax that seems pretty good.

I think generally it’s tighter as a scenario than I’d be comfortable with.

I think you’ll be fine but from experience of trawling these types of threads looking for advice, you will be told you need at least £300k a year to even think about it. We manage fine with income of £160k and DS fees of £16k but DD will move to same fee-paying school in 4 years so 2 sets of fees for 2 years. We live a fairly modest life (no fancy cars etc) but do holiday and feel comfortable. Go for it.

Oh and the MN private school bingo card of ‘school fees aren’t that low’ is here too. We don’t all live in London!!

@AyeRight78 thank you that’s reassuring. I actually think the fees are high here 😂 they were £2k a term for my old school and are now £15k. We have almost four years between our children so would only have fees for both for two years if we only did secondary and my eldest fees would essentially be covered by the rental income so only one set of fees to find really although I guess that’s where the compromise arises with forgoing baby number 3

I'm going to say no. You are basing it on maybes. Your husband's promotion, you getting another job and your continued good health.

We had five years in the bank when DS went at 8 and sufficient equity in the house to move ten miles out and realise £500k. Also what happens after 16 and you need to fund medicine, etc.

I always say when DS went at 8 the fees were £8k, when he left at 18 they were £21k. Also, the London day schools were relatively cheap. He's 30 now.

It would really depend on what your other school option is. If you have a good state school I would choose that for various reasons. Our household is in the top tax bracket our kids are in state schools and we still don't feel flush! Your financial projections are not certain and could lead you from being in a sound position to being financially precarious. I'd put the money into savings that can be used for University / house deposits for your DC instead.

@RosesAndHellebores but we could easily do this over the next four years, would this change your answer? We could save the rental income which would give us four years of fees (we currently use it towards holidays so that’s a choice) we could also remortgage one of the rentals and release five years of fees and retain over £250k of equity. We could also move from our current home if we had to as we have two spare bedrooms/ office etc again choices

I'd not have the third child if you want to do this.

I'd also look at the finances of the school. I can't see how a small school charging under 10k a year including VAT could be viable. It's barely more per pupil funding than state schools receive and they are skint with 30+ kids in a class.

It really does depend on other factors in your life and expenditure. At the moment 15% of our net income (after pretty hefty pension contributions) goes to school fees. That feels ok alongside our mortgage and other outgoings and I have a contingency fund of around 3 years of fees.
Remember those posters who think you can’t afford it are basing this on their situation. They might have a £2-3k mortgage, leases on 2 Range Rovers and an annual £15k Disney trip to fund which all reduce amount available for school fees. If school fees take priority above other things you will find a way.

Sounds like you really want your kids to go to private school so in that case go for it. But I do believe your financial projections are optimistic and based on favourable assumptions.
God forbid something happens and DH can’t work or loses his job or another massive life event happens.
Also if you remortgage your BTLs you’re looking at 4-5% interest…. That would be the cost of sending them to private school, well that and some other sacrifices.
I personally would send them to a good state or try to get them into a grammar school.

Also what if your tenants move out? And you have a period of in occupancy?
I would get a spreadsheet out and models the long term costs factoring any increases etc then stress test it based on various scenarios. Good luck!

@luckycat888 the thing is that I really want my eldest to go and feel that I can’t send just one. It’s not about favouritism at all, I adore my youngest and he is a wonder but I have no doubt he would thrive anywhere, he’s already a force to be reckoned with! My eldest is very quiet, very bright and extremely sensitive. I know he will change as he grows up but this has been a common theme since he was about 16 months and couldn’t listen to five little ducks because he was distraught that their mummy had lost them 😂 the private school setting would be so beneficial to him but I can’t send just one