As parents, we want to give our children the best of everything, especially quality education. By providing good education, we equip our children for the future, so that they can take care of their material, social and other needs.
This article highlights some important aspects of planning for your child’s educational needs.
Rising cost of education
This scenario addressed students interested in Engineering course and their parents. First, let us look at how much it costs to study for a Engineering degree in a private college. The fees for Engineering in Malaysia was estimated at RM40k per annum. So, considering other costs as well, the cost of a 4 to 5-year degree would be upwards of RM160k to RM250k.
Our goals in life
As parents, we have many goals for ourselves, and our spouse, children, family and friends. Goals for ourselves could include starting a business, retiring from active employment by age 60, travel around the world and so on.
We also need to support our spouse emotionally and financially for goals like wedding anniversary, world tour, special dates and so on. But, the two major (and most important) goals that we envisage for our children are education (primary, secondary, under-graduation, graduation, post-graduation, doctoral and post-doctoral degrees) and marriage.
However, among all the goals, the most important goal for any parent is to provide quality education to their wards.
To meet the education costs of our children, we can focus on the following two financial strategies:
- Spend less than we earn, and thus create ‘savings’
- Deploy the ‘savings’ as investments
How do I spend less than I earn if I have erratic income?
Pretty simple. Create a budget and stick to it. We should learn the art of saying no (yes, we have to say no to discretionary expenses like throwing parties and making unplanned trips). Even if we get regular salaries, the first cash outflow should be towards savings, and only the remaining should be spent. However, today, most parents spend first and say that they don’t have any money left for savings. So, when savings are zero, investments are also zero.
The deductions made by employers for EPF should be for our post-retirement life. We should never mix it up with education expenses of our child.
So, how do I secure my child’s education? What are the factors I need to consider while making investments?
Simply you can begin by taking up a education plan for as low as RM100/month and get the below benefits:
- Regular saving until the child reaches the age of 18
- Accumulate interest on saving
- Income tax relief up to RM3,000
- Plan becomes free if the payer is no longer alive.
Key takeaways from this article
- Children’s education should be one of the key priorities of parents.
- For newborns, it’s too early to decide their career. This should not prevent parents from investing for their education. The first cash flow every month should be towards investment.
- We should not use provident fund savings to meet education goals
- Cost of education goes up between 3% and 8% every year. Investing in education plan or SSPN, will help prepare you now and future.
Happy parenting and happy investing!
Article source: Parent Circle
For more detail on Education plan or SSPN-i, you can reach me at firstname.lastname@example.org and through Whatsapp at 019-6922825 for a free proposal.