Melanie Bien: School costs homework will gain you top marks

Much is made of the cost of going to university, as students graduate with average debts of around £10,000. But parents have to fork out plenty of cash, too, when their kids go to primary and secondary school.

Much is made of the cost of going to university, as students graduate with average debts of around £10,000. But parents have to fork out plenty of cash, too, when their kids go to primary and secondary school.

Although the new term is only just starting, adverts for new uniforms were first aired at the beginning of the summer holidays. The back-to-school market is big business for retailers, with pressure to buy the latest fashions in clothes and footwear adding to the burden on overstretched mums and dads.

Faced with these spiralling costs, parents are budgeting more carefully, according to the Back to School spending survey from American Express. The survey reveals that families expect to pay an average of £1,147 per child this year on sports kits, travel costs, food, school trips, stationery, calculators and schoolbags. But this compares with £1,197 in 2003 and a whopping £1,500 in 2002.

Even if they do make economies, parents will still spend around £1bn in total this coming year for the nine million children attending primary and secondary school in the UK. And this doesn't include school fees. Costs grow as the kids do, with the average annual expense for secondary school some 33 per cent higher than at primary school.

Raising children is expensive, so do some budgeting to ensure you've got enough cash to pay for that pricey sports gear, for example. Most parents cope from pay cheque to pay cheque, but putting a little aside each month for the future, if you can afford to do so, is a good discipline.

As with saving for anything, you should have a clear idea of when you will need to get your hands on the money. If you have a newborn baby, for example, and are keen to raise cash to see him or her through university, the money will be invested for 18 years. This is more than enough time to concentrate on shares, because you will be able to ride out the peaks and troughs of the stock market; the potential for growth is much greater here than with a staid savings account.

However, it is advisable to switch the money from riskier investments into cash before the time it is due to become available. Otherwise, the market might dip just when your child needs access to the cash, and they could lose out.

If you want to send your 10-year-old to private school from the age of 11, and haven't started saving for this, your investment choice is more limited - short of a personal loan from either a bank or a rich family member. Stocks and shares should be avoided unless you are prepared to leave your money invested for at least five years, and preferably longer.

However, with the child trust fund being launched next April, there's a real opportunity for parents to instil in their children the importance of saving. The Government will contribute a voucher worth £250 (£500 for poorer families) to each child born on or after 1 September 2002, and parents must invest this cash in one of the tax-free investment vehicles. This could be a savings account (not a great move, given that the money will be invested until the child is 18) or equities (a far better choice).

Parents and other relatives can invest up to £1,200 a year in the child's fund. Then, once the child is 18, they can get their hands on the cash. There are no restrictions on what they can do with it - they could buy a car, put it down as a deposit on their first home or pay for university.

The hope is that financial education in schools (backed up by parental example) will enable the child to make sensible decisions. Ideally, this will mean that tomorrow's adults avoid the unauthorised overdrafts, expensive store cards and extensive debt that plague their parents.

m.bien@independent.co.uk