When a close friend became a parent for the first time, university felt like a lifetime away. In those early days, the focus was on night feeds, figuring out how to use the car capsule, and adjusting to the new normal. But not long after, she said something that stuck with me: “One day, she’ll be 18 - and I want her to have choices.”

In my professional life, I’ve had countless conversations with parents who’ve expressed similar hopes. They’re not necessarily trying to pay for everything - they just want to offer their kids the freedom to choose their path without being held back by money. What follows is a reflection on what I’ve seen work well for some families, including my friend’s approach. It’s not advice - just personal experience and professional perspective. If you’re considering starting a university fund, a qualified financial adviser is the best person to guide you through what’s right for your situation.

What University Can Cost in New Zealand

For many parents, the word “university” brings to mind tuition fees. In New Zealand, these are relatively modest compared to other countries - most domestic students pay between $6,000 and $10,000 per year, depending on the course and institution.

But that’s only part of the picture.

If a child moves out of home, living expenses add significantly to the total. Rent, food, transport, study materials, and other day-to-day costs can easily add up to $15,000 to $20,000 annually.

Put together, a standard three-year degree could come to $60,000 to $90,000 in today’s dollars. Factor in inflation of 2–3% a year, and by the time a toddler today is ready for university, that number could rise to $80,000 to $120,000 - or more.

Why One Family Chose to Start Early

My friend and her partner started putting aside $50 a week shortly after their daughter was born. They used an investment fund that aligned with their comfort around risk and their long-term timeline. Their aim wasn’t to cover everything, just to lighten the load down the track.

Their motivation was less about the numbers and more about flexibility. They didn’t know yet what their daughter would want to study or where, but they wanted to be in a position to support her options when the time came.

This approach worked for them. It felt achievable, consistent, and helped them feel like they were doing something meaningful without having to overhaul their lifestyle.

What I’ve Observed in Other Families

Over the years, I’ve seen many different approaches. Some parents put money aside in managed funds or diversified investment portfolios. Others prefer education-specific savings schemes or separate bank accounts earmarked for study costs.

Each method has its own pros and cons, and the right fit depends on factors like your timeframe, comfort with risk, and how accessible you want the funds to be. I’ve also seen some parents structure investments under their child’s name using Portfolio Investment Entities (PIEs), which can come with tax efficiencies depending on the situation.

But I can’t stress this enough: what works well for one family might not suit another. That’s why, if you’re considering a plan, I always recommend speaking with a qualified financial adviser. They can help you navigate the options and figure out what’s appropriate based on your family’s unique circumstances.

Considering Timing and Risk

Some parents I’ve spoken with think about their investment strategy in stages.

In the early years - when university feels far off - they’re often comfortable with growth-focused investments. As their child reaches intermediate or high school, they tend to shift toward balanced or conservative options to help protect what they’ve built.

This gradual transition reflects a basic principle: the closer you are to needing the money, the less room there is to recover from unexpected market downturns. I’ve seen this kind of staged approach work well - but when and how to make those changes depends on your overall goals and comfort with risk.

Again, this isn’t advice - just something I’ve seen parents do.

Where Parents Often Get Caught Out

There’s no perfect plan - life has a way of changing priorities. But here are some patterns I’ve noticed:

Waiting too long to start: even small amounts, when started early, can build up meaningfully over time
Underestimating living costs: tuition tends to be the headline figure, but everyday expenses can easily double the total
Keeping everything in cash: with inflation, funds that aren’t growing may lose purchasing power
Not adjusting investment risk as university gets closer: market dips late in the timeline can have more impact

None of these are irreversible, but they’re worth being aware of early on.

Every parent’s financial situation is different. For some, putting aside money each week or month is possible. For others, support may come in the form of helping with textbooks or offering a rent-free place to live. There’s no one right answer, only what’s right for your family.

In my friend’s case, the goal wasn’t to cover every expense. It was about being prepared to say yes when an opportunity arose, whether that’s a semester abroad, a move to a new city, or a course that inspires passion. It was about offering options, not outcomes.

If you’re thinking about how to plan for your child’s future education, I’d encourage you to speak with a qualified financial adviser. They can help you understand the tools available, tailor a strategy to your situation, and give you clarity on the path ahead.

Jeshal Patel

Certified Financial Planner

Disclaimer
This article is general information, does not consider your financial situation or goals, and does not constitute personalised advice. There are no warranties, expressed or implied, regarding the accuracy or completeness of any information included as part of this article.

Education Costs in NZ: How Some Parents Prepare