My immediate thoughts: offset, renovation and private schooling.
There are other things to point out in your budget like your groceries and travel, but these three are the big ones. First let's deal with the stuff costing you hundreds of thousands of dollars, then we'll worry about the tens of thousands, then the thousands.1.
Offset account. Get one. This allows you to put extra on the mortgage, while being able to draw it out in case of some emergency. Paying extra makes a huge difference to when you are debt-free, and saves you a lot in interest. See -
https://www.ing.com.au/home-loans/calculators/extra-loan-repayments.htmlFor example, $1.03 million at 3.55% for 28 years gives us repayments of $4,841. An extra $133 a month would save 1yr3mo and $30k in interest. That's basically your planned private school fees for a year for both kids. An extra $260 a month is 2yr4mo and $56k saved. For reference, taking your current spare income of $5,500 and putting it all on means you pay off the house in 10 years instead of 28, and saves you $405k in interest. That's your children's $15k pa private education, with $15k in change. Lacrosse and violin for everyone!
2.
House renovations, $300k. Does your place
need renovations? What's wrong with it?
3.
Private schools, $390k (13 years x 2 kids @ $15k per year per kid). This can be at least halved, as there's no doubt that in primary school it makes no difference.
Altogether these three things are accounting for
over a million dollars over the next decade or two. A million. You could just about buy your whole house again for that.
A far more important factor, the report argues, is the background of the child's family, including income, social circles, the number of people who had completed high school in their neighbourhood, their parents educational attainment or health factors, such as the weight of a baby at birth. But there is one key factor to rule them all. "Children in families with more books at home have consistently higher test scores," he said. Those books can prove their worth long before the child scribbles down their first word. "One of the strongest predictors of a child's success is their level of development at preschool. What the data suggests is that because they haven't been exposed to schooling yet, whatever skills that have been developed due to nature or nurture are really influential."
[https://www.smh.com.au/national/nsw/private-v-public-schooling-20150416-1mm8bn.html]
Your children will have parents with a high income, educated people in their social circle, if your house is $1.5 million then everyone in your neighbourhood has a uni degree, let alone finished high school - and you'll have books in your home. For primary, ditch the private and save yourselves $210k. Read your kids a bedtime story.
As for high school, the kids themselves say it makes little difference. Going to a private school gives them more access to things like lacrosse, rowing, learning French and so on, but gives them a less culturally diverse social circle - that's their words, not mine [https://www.smh.com.au/lifestyle/life-and-relationships/private-public-or-selective-high-school-does-it-really-matter-20180124-p4yytp.html]. But at the least private primary school is pointless.
There may be a cultural argument for example we're Jewish - but the Jewish schools are $25k per child annually. For that we can just take them to synagogue and go to some community events and all that.
Our children are going to state primary schools, but a good one - one with a bilingual programme. In this, the second language is less important than the sort of people who seek out and send their kids to a bilingual school - it's mostly higher income and better-educated parents who are involved in their children's learning. In other words, the same benefits of a private school but at much less cost.
In secondary school, we'll seek out a similar one, and if our children are lagging in something, get them a tutor. If the lad is dumb in maths, we find some maths undergrad and give her $5,000 in cold hard cash she doesn't have to claim against her student allowance, in exchange for a year of three hours a week of maths tutoring for him.