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Financial Planning for your Children’s University Education

Financial Planning for your Children’s University Education

Last Updated on August 22, 2022 by Parentology

College and university degrees are becoming prevalent, and almost mandatory for the workforce in the current age. To that end, child savings plans in Singapore have also become more and more popular, especially education funds for your child. More and more parents are looking into financial planning for their kids and one of the common topics that come up is how to afford increasing university fees, with many parents asking the hard questions:

How much should I give my child for university in 2022, or even later? How should I fund my child’s education? What is the best child education plan in Singapore? Should I get an NTUC education plan? This article aims at addressing these questions and concerns.


Why should you plan financially for your children’s education?

University fees are increasing and will continue to do so whether locally in Singapore or overseas in other nations. While most countries have systems in place where their locals are provided more affordable fees compared to their international peers, even the fees for locals have slowly begun to increase. For instance, take a look at the annual fees for existing students in the medicine programme at the National University of Singapore:

Year AY2018/2019 AY2019/2020 AY2020/2021 AY2021/2022
Fees 28,400 28,900 28,900 29,300

Fees will raise due to a variety of reasons, and one of the primary ones is inflation; as such, university fees frequently rise around 1-2% every year to roughly match inflation, and on top of that if the university has other programmes they are planning to expand, they may additionally increase their fees.

While the Singaporean government does its best to ensure that tertiary education is affordable, the increased fees are especially applicable in overseas universities, which charge hundreds of thousands of dollars to international students.


How should you prepare, and what can you do?

The principles of financial preparation hold the same: establish your current status, establish your goals, and form a plan (save, insure, invest).


Establish your current status

Regardless of what stage of life you are in, look over your current budget and your current financial situation. How much income is your family unit bringing in through salaries, investments, and savings? How much is your family spending? How has this changed and how might this change? If you are on top of your financial plans, you may already have some semblance of this and may only need to make additions to it.


Establish your goals

In this matter, we are looking purely at your financial goals for being able to avoid your children’s tertiary education. The first is to roughly estimate what that may look like, which varies based on your expectations and the performance of your children. Perhaps you would like to plan for a local university; perhaps you are planning on sending your child overseas. Pick a reasonable target, and search online to look up their fees. Extrapolate what the fees might be by the time your children are likely ready to enter and look up everything from regular tuition fees, to applications, accommodations, textbooks and other extracurricular activities. Depending on your plans, you may also want to look into allowances for your children through university.


Form a plan

Now you have a starting point and an ending point, and the question is how you are going to get yourself from one point to the next. The approach to financial planning, as discussed, covers three things: save, insure, invest.

Saving is quite straightforward and is something that pretty much everyone is familiar with. Begin saving as soon as you can – from pregnancy, from birth, even now – and allow it to grow as much as possible. Ideally, you will already have regular savings for your family unit, and simply add one more for your children via a student bank account.

Insuring is familiar as well. There are multiple insurance savings policies that parents can purchase when their kids are very young; they can subsequently be withdrawn later to finance university. These plans are often difficult to withdraw from before the planned date of surrender, to discourage parents or legal guardians from taking money away from the plan and thus ensuring the availability of funds for their children in the long term. There are also a large number of endowment plans available, which will be described below.

Investment is something a little newer for most people. As discussed, inflation is one of the reasons why university fees are growing so much, and leaving your money stagnant in a savings account does not help tackle this over the course of some two decades. Instead, many are beginning to look towards investing as a way of combating inflation as it can help your money grow. Look into various options, and begin investing based on your preferred level of risk.


What happens after I make the plan?

Execute it and adjust it! Your children’s performance may go one way or another, as will your lives. Your plan cannot remain static, so do adjust it once in a while – usually annually.


University bursaries and grants

Many universities – especially Singaporean universities – will offer bursaries, grants, and loans. There are many sourced from private funds, international grants, and the local government as well. They all come with different terms and conditions, so it would be wise to look over them with your child when they start turning of age.

Many of these are available to those who are high academic achievers, or those who have demonstrated specific talents (e.g. by winning competitions in certain fields). Some grants are available to assist minority or disadvantaged populations as well, and government grants and loans are always applicable to those whose families require additional financial assistance.

Eligibility may vary as well; speak with the university’s financial team to get a grasp on what options of tuition coverage are available for your children.


Potential Endowment Plans

There are several potential insurance plans that may help you with achieving your goals regarding funding your children’s education, listed below. For a comparison of both options, please refer to this link.


China Taiping i-Saver8

The China Taiping i-Saver8 has a short maturity plan of 8 years and only a 2-year premium. It is a guaranteed payout after 8 years and does not require any underwriting for application, which in essence guarantees approval as well. It has competitive yields of around 3.13%, which is comparable with average annual inflation and beats most savings accounts available on the market. Its short term and high yield make it a great savings plan for educational needs.


Singlife Choice Saver

This plan is popular for education because of its difficulty in partial withdrawals. There are no cash benefits and you will be unable to withdraw a portion of the funds for other needs until maturity, which helps you maintain discipline when it comes to saving for your children’s education. Should you choose, you can also transfer life assured, and it has a legacy aspect that allows you to retain the plan until age 99. Its flexible premium and policy terms, and capital guaranteed status, as well as other additional benefits as seen in the link, make it helpful in adjustments over time based on your situation.


Find the most suitable savings plan for your child today!

When it comes to the suitability you and your child, the time horizon as well as the amount needed is a big factor to consider.

To find the most suitable endowment savings plan based on your concerns and needs, simply fill in the form below and our friendly partnered licensed FA advisor will get in touch with you.

Based on your needs, a custom made solution will be adjusted only addressing your concern with no obligations nor hidden fees.


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