How much do you need for your child's education?
If you’ve only got a minute:
- It’s never too early to save for your child’s future as tertiary education cost is high and expected to rise.
- Remember to take into account the effects of inflation on your savings.
- You may consider investments, higher interest savings accounts or endowment plans to grow your child’s education fund.
When should you start planning for your child’s future? The quick answer is as soon as possible. Starting to save early and consistently will give you more time to accumulate your target funds, along with the effects of compounding.
If you’re a new parent, you may question the need to plan for something that will likely take place only two decades later. However, it is crucial to anticipate that education expenses will continue to rise further. Here’s a look at the current tuition fees and related costs for an undergraduate education, both local and overseas.
|
University location |
Estimated cost per year |
|---|---|
| Singapore | $8,250 – $30,2001 (depending on course) |
| Australia | $18,000, – $41,0002 (depending on course) |
| United Kingdom | $30,000 – $42,0003 (depending on course) |
| United States | $27,000 – $74,0004 (depending on course) |
In Singapore public universities, a 4-year undergraduate program costs around $33,000 for Singapore Citizen students, and it does not include other miscellaneous fees. With demand rising, it’s safe to assume that fees are likely to increase further.
If you’re thinking of sending your child to an overseas university in Australia, the UK or America, the fees charged by universities are higher, ranging from $18,000 to $74,000 per year. Additional expenses such as accommodation, living costs and flights can easily bring the total yearly expenses up to $100,000 or more.
How should you plan for your child’s future?
Start by identifying the approximate amount required, and take note of how many years you need to save in order to reach that target. A Singapore-based student typically enters university around age 18 for females, and age 20 for males. Your savings target should include inflation rate, or the possible increase in fees over the two decades. Based on the average cost of $33,000 for a Singapore undergraduate education, with an annual inflation rate of 4%, the amount in 20 years’ time would stand at about $72,000.
With a figure in mind, you can start working backwards to determine the amount you need to regularly set aside.
Investing in your child’s education
Remain calm even if your expected savings fall short of the targeted amount. Besides embracing a frugal lifestyle, you may want to explore investment options to help you reach your target amount faster. Consider seeking professional advice by speaking to a wealth planning manager to receive guidance on your next possible steps.
Alternatively, you may consider getting an endowment plan that aims to protect and grow your savings with fixed returns. Most of these plans provide the flexibility for you to select your desired payout age, to match with your child’s educational milestones. Such plans may allow you to pa y premiums over a set duration. At the end of the policy term, you will receive a lumpsum cash benefit in time for your child’s tertiary education.
You may also consider opening a higher interest savings account like the DBS Multiplier, which rewards you with interest of up to 4.1% p.a. when you credit your salary and transact in one or more of the following categories: credit card/PayLah! retail spend, home loan instalment, insurance, and investments. Best of all, there’s no minimum credit card spend or salary credit required.
On top of that, there are numerous investment products that you can consider to help grow your money. Depending on your investment profile/risk appetite, you can opt for unit trusts, bonds, equities or Exchange Traded Funds (ETFs). Do bear in mind that investments carry risks. Do your due diligence or consider approaching a financial consultant. .
Lastly, schedule regular reviews of your savings to ensure that you are on track. If required, make adjustments to your saving/spending habits or make appropriate changes to your plans if necessary.
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Sources:
1http://www.nus.edu.sg/registrar/administrative-policies-procedures/undergraduate/undergraduate-fees
https://www.ntu.edu.sg/NSS/NSSFinance/FeesTuitionGrant/Pages/TuitionFees.aspx
https://www.smu.edu.sg/campus-life/financial-matters/tuition-fees
https://sutd.edu.sg/fees
https://www.singaporetech.edu.sg/admissions/cohort-fees
2https://www.mastersportal.com/articles/1589/study-abroad-in-australia-tuition-fees-and-living-costs.html
3https://www.idp.com/singapore/study-in-uk/cost-of-study/
4https://www.idp.com/uae/study-in-usa/cost-of-study/
Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.
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