The best investment we’ve ever made has been in the education of our four children. It’s also been one of our biggest investments and gee are we glad that phase of our life is now over.

Whether it’s in the state or private system education certainly isn’t free anymore and that cost is not only climbing but also extending.

The annoying thing is also the timing of the expenses. Just when you’re trying to pay off the Christmas credit card bill the back-to-school costs start.

School shoes, uniforms, textbooks, stationary, a couple of hundred dollars in “voluntary” school fees and much more for the 30 per cent of Australian kids that go to independent schools. Bills continue to come in through the school year for camps, excursions, music lessons, dance classes and other extra-curricular activities.

Changes to the higher education system now means the cost of sending your children to university will either send parents broke or students in to long term debt.

Either way it’s daunting for couples who don’t know how much hard cash they’ll need to feed, clothe and educate their children.

However, you can take the stress out of education costs by planning ahead and saving now for the big expenses ahead. And rather than saving in traditional bank savings accounts, there are other ways to make your money work harder for you.

We must admit our family rule is that we pay for the secondary education of our kids but not university. Our view is that is their responsibility and they’re responsible for HECS.

That may sound harsh but we believe there is a point where grown up children need to start taking responsibility for themselves.

But that’s just us. If you do take on the cost of university fees, you’re going to have to think hard about it.

As always, the key is to start early and have a disciplined approach.

Look at things like having an automatic debit from your transaction account on pay day that transfers a percentage of your salary in to an investment account. Or maybe at the end of the day stick any change in your pocket in to a jar… but make sure you hide it from the rest of the family.

Talk to your adviser about putting money into bank shares. That way your money hopefully enjoys the capital growth of a rising share price and the fully franked dividends that banks usually pay. In fact, over the last 10 years investing in bank shares has produced a better return than investing in any product a bank has offered its customers.

Similarly, by investing in a managed fund, your money will be exposed to growth investments like shares, property plus money market interest accounts. As you’re saving over a long time, shares and property should deliver the best returns.

Many managed funds have savings programs attached which let you add a few hundred every month and allow reinvestment of ‘distributions’ (ie. the returns they make).

There are also a number of education and “scholarship” funds on offer which can offer a good option. Our only problem with some of these are their flexibility in that if your child doesn’t go to uni you get back what you’ve invested without any or just a small, return.

In terms of expenses;

. try to pay cash for back-to-school expenses and if you have to use a credit card don’t charge more than you can afford to pay off in one billing period.

. check the school list, work out what you already have, make a specific shopping list of what the kids need and stick to it.

. keep all your receipts to claim against the government’s 50 per cent Education Tax Refund. It covers the cost of things like stationary, textbooks, computers, and home internet connections (school fees are not included). This financial year you can claim expenses of up to $794 for each child in primary school and up to $1,588 for each kid in high school if you receive Family Tax Benefit Part A.

Hold off buying new uniforms until 1 July 2011 because then you can claim against the Education Tax Refund.

. also check your State Government initiative. Victoria’s Education Maintenance Allowance is probably the most generous. School admin offices should have details.