Making cents: Mother’s Day bargains and planning for college costs

LAST month, more than 75,000 students completed their CAO applications, listing their course preferences for third-level.

It marks the start of a hugely exciting time in their lives, but one that comes with a hefty price tag. According to Dublin Institute of Technology’s Cost of Living Guide 2016/17, the average cost of a year in college is €6,834, and that’s if they are living at home.

If the student has to move to rented accommodation, it rises to €11,064. Multiply that by four years and you can see why parents spend years saving to prepare for their children’s college years.

An early start to saving will make a huge difference in terms of how much needs to be put by on a monthly basis. Parents who start saving as their child enters secondary school will be looking for more than €600 per month for six years to reach €44,000.

Beginning as the child enters primary reduces that to approximately €260.

If you can be organised enough to save from birth, you can reach your goal by putting aside around €200 each month.

Those figures are just looking at the capital sum saved, without allowing for the additional benefit of years of compound interest. Interest will add to your final amount but bear in mind inflation will likely increase the cost as the years go by.

The simplest option for this type of saving is a Regular Saver Account where you commit to a fixed monthly payment.

Deposit rates generally are very low but regular savings offer some of the best rates around, for the first 12 months anyway. Top of the range at the moment is the EBS Family Savings Account, which offers 3% AER fixed for monthly savings of between €100 and €1,000.

There are restrictions on withdrawals, with one allowed during the term and the other at the end of the year.

AIB, Nationwide UK (Ireland), and KBC (if you have a current account with them) all offer 2% AER and, if you are looking at smaller amounts, the AIB account has a minimum monthly deposit of €10. Interest payments on all these accounts are subject to DIRT which is currently 39%.

The other thing to bear in mind is that the rate on these type of accounts usually drops steeply after 12 months, so you will need to review annually. You can start a new regular saver account at the higher rate, while your accumulated balance earns a lower rate on deposit.

Another option for parents looking to save regularly are the state savings options offered through An Post.

The rates on these aren’t high but have the advantage of being tax-free, so you don’t lose that 39% to DIRT. An option to consider is the ‘6 Year Instalment Savings’, which is based on 12 monthly contributions which are then invested for a further five years. The total return on your savings is fixed at 5.5%, working out at 0.98% AER.

It’s not huge but it compares favourably with retail bank deposit rates and you do have access to your money, subject to seven days notice, should you need it.

There is an automatic annual renewal should you wish, so if you start as your child enters secondary school you could have a lump sum maturing each year as they go through college.

With rates so low, parents should know inflation is likely to outstrip the interest added and gradually eat away at the value of their savings.

To avoid that, they should consider an investment-based savings plan, particularly if their children are young. Over the long term, these would be expected to outperform deposit accounts.

Aviva, Irish Life, and Zurich Life all have versions, sit down with an independent broker and see if there is an option that will work for you, depending on your risk appetite.

There is no need for parents who know they won’t have the above amounts saved by the time their children reach college to panic. On average, 40% of students receive higher education grants.

Those that do will have half or all of the student contribution paid and may also receive maintenance.

The highest amount, payable to students studying more than 45km from home, is currently worth a total of €6,025 per annum.

Mother’s Day bargains

Don’t panic, Mother’s Day is still almost two weeks away — March 26. However, if your mum is a beauty fan you could get your present sorted this week at Aldi.

The retailer has earned stellar reviews in the past for its skincare range, Caviar Illumination, and is bringing a number of the products back this week.

For €17.99, you can buy the Caviar Illumination Gift Set, which includes a moisturising day cream with SPF15, a hydrating night cream and a set of day and night ampoules.

The range also includes an eye roll-on for €4.99, 7 Days Intensive Treatment for €5.99, and a Super Lift Gel Set for €14.99.

Also of interest for skincare aficionados is the Pro Style facial cleansing tool, its version of expensive facial brushes such as the Clarisonic.

The set includes a normal brush for removing make-up, sensitive brush, dermabrasion brush, body brush, massager sponge, wrinkle reducer, and storage cradle, all for €18.99.

If there are any consumer issues that you’d like Gráinne to address or if you have problems that Gráinne could help with, she can be contacted at [e-mail]