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FINANCIAL PLANNING

Education Planning, It's Academic

“The children are our future ……”, as it is written in a well know song and this more true today then ever before. Parents treat their children as precious items that they are and like to spoil them where they can. However, when it comes to education most parents understand that the best way to spoil their children is to provide them with education. Education is the best form of investment that they can give to there children as it equips them for life. It is well known that our rapidly changing world requires employees to obtain a higher level of education to compete in a competitive job market.

To provide the best possible education for our children is not cheap and the cost of higher education has been increasing at an alarming rate. Asian parents are generally focused on putting aside funds for there children education, but the Western counterpart are not as well prepared for the high costs of tertiary education, which can add up to a minimum cost of more than SGD$40,000 a year, once you incorporate books, accommodation and other associated costs.

Typically, the total cost of a tertiary education, courses alone, can range from about $20,000 upwards toward $80,000 and beyond. The result too often is a huge stress on a family's finances, and a debt trap. It is estimated that an International student living and studying in Melbourne, Australia would need about AUD$23,000 to AUD$29,000 per year to meet their living costs alone.

Planning Ahead For Higher Education

The best way to save for a child's future is to start early. This is especially true if you are planning on sending your children to private schooling. This means that the best time to start is when the child is born. If you haven't already started saving for your child’s education then please note that it is always better to do something than nothing. Also, the best strategy is to create an investment plan tied to your child's age.

Given the cost of education all parents needs to plan ahead. There are more strategies for managing education costs for those who plan ahead.

• Have a goal - Although parents cannot dictate what their children will be when they grow up but they do have certain aspirations. These aspirations will give the parents a guide on what to plan for in terms of cost and time frame. However, as the child grows up these goals can be modified to suit the child’s own goals and aspirations.
• Create a plan - Financial advisers can assist with the development of the most appropriate plan for your needs. There are a number of ways to fund the children’s education and not all of them involve insurance policies. Invest according to your goals and time frame into managed funds, shares, insurance policies or term deposit accounts (see Table 1).
• Costing – Understand that there are ‘Fixed Costs’ like tuition, fees and board. While ‘Indirect Costs’ comprises of personal expenses, food, transportation, etc.
• Maintain a disciplined approach – Like any other goal a discipline approach must be used such as a monthly savings plan.
• Research – Always research your options, including grants and scholarships government assistants. There are lots of programs available to help parents to fund their child’s education.
• Insurance – It must be noted that many people forget to incorporate the child’s education costs when calculating their Life or Critical Illnesses insurance requirements. When parent underestimate their insurance needs and then the child may be placed in a situation where there is not enough funds saved for their future education.
• Balanced Approach – When allocating funds for the child’s education make sure that there are a balance savings approach. This means that the parent doesn’t sacrifice other goals (like retirement planning) in order to meet the education goals alone.

Cost saving tips for Students

The cost of education need not be born total by the parents alone. Sometimes the child still needs to take some responsibility once they have entered higher education.

• Find part-time work – There is nothing wrong with the child doing part time work while studying for their degree. Besides the child being able to contribute to the costs but they will probably develop a more down to earth attitude to their studies and life.
• Government Assistants and Grants - Research grants and scholarships that are available to parents and students. This will help in reducing the cost of education immeasurably.
• Student Bodies - Find out if the institution has a student guild or union in order to make the most of its resources, discounts and giveaways.
• Keep The Lifestyle Simple – Sometime students are spoilt and expect not only a first class education but a first class lifestyle as well. It is important not to over indulge the child’s expectations as it would increase the educations costs and also may make the child less likely to study hard as they could be partying all the time.

Your child is one of the most important part live and giving them the best is always an important requirement for most parents. As most parents knows that the best investments that can be given to a child is not material gifts but a first class education. As it was once said …….

“Give a man a fish; you have fed him for today.  Teach a man to fish; and you have fed him for a lifetime”

—Author unknown