We so often associate the cost of educating children with school fees that it can be all too easy to forget that these are actually in addition to other costs that all parents face.

News from UK insurer that the cost of putting each child through school from the age of five to 16 is £15,940, including transport, food and sports kit may not sound very much, but for a family of two children, this can cost as much as £3,000 a year – or more than £75 per week for 39 weeks. And this does not include the cost of feeding, clothing and entertaining them for the rest of the year!

Nor does it include the cost of sending a young person through university.

With prices appearing inexorably to rise, especially at the moment, it is a good idea to consider ways of planning investments to cover these costs in advance; in fact as soon as a child is born is not too soon.

Actually, things are getting worse not just because of inflation, but also because of the need to provide technology such as laptops and mobile telephones for students. It has been estimated that this can cost as much as £542 per child over 11 years.

Interestingly times of recession are when people tend to save an increasing proportion of their income (called the savings ratio), whereas when the economy is growing, the ratio often falls. For example, in the early 1990s, the savings ratio was more than 11%, but by the end of July, this year, it had fallen to just over 1%.

The reasons for this are many, but relate largely to the fact that when times are good, particularly with rapidly rising house prices, people tend to feel confident in the future and are less inclined to think about the future, whereas when money is getting tight, concern about having sufficient to cover living expenses in the future becomes more prevalent.

Saving for the relatively short to medium term requires a balance of strategies; cash is likely to be more suitable for the shorter term, because there are lower costs and the risk of volatility or even loss of capital is minimised, but for the longer term equity based investments may offer the potential for greater positive returns.

For this reason, some people may opt for an ISA investment that allows them to invest up to £3,600 a year into cash and a similar amount into equities (usually through collective investments such as unit trusts) with the option to re-balance money from cash to equities later on, if required.

If starting well in advance of school, it may be appropriate to invest a higher proportion into equities, since no access to the money at all may be required for up to five years. If, however, school costs are looming close on the horizon, or have already started, a higher proportion of investments into cash may be safer.

The actual balance will depend on a number of factors and it is impossible to generalise with any degree of accuracy. As ever, it is important to take individual advice before making any decision regarding your finances. For further information, please contact Robert Bruce Associates. The value of investments is not guaranteed; you may get back less than you put in.

NOTHING CONTAINED IN THE ARTICLE SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE. PLEASE NOTE THAT THERE MAY BE VARIATIONS FOR THOSE LIVING IN SCOTLAND AND NORTHERN IRELAND.