Here Are 3 Simple Ways to Plan Ahead for Your Child's Education

In Singapore, parents spend a average of $21,000 a year on their children’s tertiary education. A majority of parents also feel that funding their children’s education is more important than paying the bills, or even their own retirement.

Depending on which university your children decide to go to in the future, be it local or overseas, and the course that they intend to take, the costs can fluctuate wildly. However, you don’t have to sacrifice your own savings or retirement fund just to finance your child’s education cost. Thorough and early preparation can help you to save enough to encourage your child to pursue their aspirations freely . You could also plan well enough to retire worry-free in your later years .

Here are 3 simple three tips to help you plan for the hefty cost of education in Singapore.

Start saving early

For Singapore Citizens and Permanent Residents in Singapore, school fees prior to university are mostly heavily subsidized.

On average, every child in Singaporean child would have received over $130,000 in subsidies by the time they complete secondary school education. For post-secondary education, most would receive $15,000 to $22,000 in subsidies annually. The cost of education that will be borne by the parents are the tuition fees.

Since 2007, however, Singapore’s university costs have risen by an average of 38%. In fact, tuition fees go up by 0.4-0.6% a year. Thus, it is only wise that parents start saving early in order to prepare for the hefty education fees later on in their children’s life, especially for tertiary education.

There are several ways to save up for your children’s education. - one of them is through a savings / endowment plan. These plans help you save by having you pay regular premiums throughout the duration of the plan, and these are a generally fixed amount. There is a fixed maturity period, usually between three to twenty years. One way that Singaporean parents plan for their children's tertiary education is by starting a plan when their children are very young, with the maturity date matching the age at which their children are expected to need the funds for university or other education.

AXA's version of such an endowment plan is AXA Early Saver Plus. AXA Early Saver Plus is a flexible plan that offers a guaranteed return of up to 1.57% per annum. You have a choice to have a policy term anywhere between 10 to 25 years, paying premiums for either 5 or 10 years.

The earlier you save, the earlier you can fulfil all your financial goals. With a savings plan, you can reach your goals even faster by making your money work harder for you.

Let your kids contribute

While tuition fees are costly, it may not be a wise idea for parentssome parents may not want to shoulder the financial burden by themselves. Over 25% of Singapore parents expect their kids to contribute or repay some of the university fees, but yet only 5% do.

If you are looking at opening a savings plan exclusively for your child’s education fees, consider getting your child to contribute to it as well. As they take on a few part-time jobs or internships, putting in a few hundred dollars into the account can help them to learn the importance of saving, as well as cultivate in them the concept of money management.

Some studies have even shown that working less than 20 hours per week in university resulted in better grades. Hence, not only will getting a part time job be beneficial for your child’s studies, but it can also help to carry some financial burden off your shoulders.

Explore different payment schemes

There are different ways of financing your child’s education.  

Explore the different bursaries or scholarships that are available for your child. Those can help you to cushion part of the fees.

You may also consider using credit or loans to pay for your child’s school fees. However, Iusing such means should normally only a last resort, as loans may come with interest rates that continue to accrue over many years.

Overall, it is best if the family can plan together and start a savings plan early to support your children’s education. Relying on your day-to-day income may not be the best choice especially if you have more than one child . As the university fees multiply, the financial burden will only increase in the future.

Nonetheless, with the right planning, you could support your child’s education without risking your financial health at the same time.

Disclaimer:

This article is for general information only and does not take into account the specific investment objectives, financial situation or needs of any particular person. The views expressed herein do not necessarily reflect the views of AXA Insurance Pte Ltd and should not be construed as the provision of advice or making of any recommendation. There is no intention to distribute, or offer to sell, or solicit any offer to purchase any product. We recommend that you seek the advice of a qualified financial advisory professional before making any decision to purchase an insurance or investment product. Whilst we have taken reasonable care to ensure that all information provided was obtained from reliable sources and correct at time of publishing, information may become outdated and opinions may change. We are not liable for any loss that may result from the access or use of the information herein provided.