Every child is entitled to three basic things from the onset of birth and throughout their development. That is a proper education, sufficient health and a decent quality of life. Anything else such as vacations or developmental courses might be attractive but are not compulsory. To attain the basic necessities, parents are charged with the responsibility of providing school fees, medical protection and living expenses.
So the Question begets: Why should parents start planning for their child’s education now?
It’s All Inclusive
Parents have the mandate to provide the basic needs that improve their children’s quality of life as they grow. Besides, it is normal for parents to wish the best for their children. In an attempt to facilitate this, however, it is not uncommon for parents to experience financial constraints. As much as you may want to budget for other personal things, it is likely to experience feelings of guilt if you feel your child is lacking.
This is why it is important to plan early. It will not only benefit your children but also foster your financial stability. With a proper and well outlined financial plan, you can cater for your children’s long term education process. You can also get enough to cater for your retirement needs.
Life moves on faster than we anticipate. One day you are training your child how to take their first step and before you know it, they are filling out college applications. You should strive to ensure that your child chooses a course based on their passions and interests rather than your financial ability.
If you do the math, the general cost of raising a child by providing their essential needs to a point of financial independence can be quite steep. This makes it advisable to take up life insurance for the main reason of repaying one’s parents this magnanimous financial debt. To put this it in figures; average living expenses would cost approximately $500 every month for twenty years. That accumulates to $120,000 excluding inflation. The total tally in finances required to provide the three basic things amounts to approximately $200,000. Most financial advisors would not advise the life insurance route. With such figures, however, this is probably the best option to ensure the ultimate financial security.
Before we talk about Tertiary Tuition fees, one of the first few education a kid will go through is childcare/nursery/kindergarten education:
Read More Here on The Various Instruments To Plan & Prepare For Your Child’s Education
1. Estimated Tertiary Tuition Fees for Your Child’s Education
The table above shows the annual tuition fee on a local University currently. However inflation (usually estimated at 3%) is not factored in here. Compound on that in 18 to 20 years time, the amount will only get bigger and bigger.
2. Estimated Time Frame For Your Child’s Anticipated Course
For an accountancy or business degree course which are the most commonly taken courses it would take 3 years. You might want to consider adding one more year in case it is an honours degree.
For an engineering degree your child would take four years.
3. Anticipated Living Expenses During Your Child’s Development
Three Tips to Consider When Starting a Savings Plan for Your Child’s Education
For responsible parents who are concerned in seeing their children get a proper education the following are some fundamental tips to consider before making that education plan for your child.
1. Plan Better on the Maturity Pay Out Date
According to the National Service the maturity age is 19 years for girls and 21 for boys. These are the age figures to use while making endowment plans which include standard maturity terms. To enhance your financial status, instead of setting the maturity date of 15 to 20 years or when your children complete their tertiary education (which is usually at 25 years of age) as most people do you can set it when they start their tertiary education.
2. Ensure the Education Plan is Flexible
As the children grow, experience life and learn new things they tend to create their own paths. Even then they still need their parent’s support. This therefore means that your plan should be flexible enough to cater for these developing needs. For instance learning institutions are packed with co-curriculum activities such as sports or the debate club which may garner the interest of your child. If they excel in these co-curriculum activities they may need funds to enable further pursuance of these interests such as overseas trips kits and uniforms. Your child may also have to go to university later than initially planned due the pursuance of these interests. This is why your financial plan should be flexible enough to allow early as well as late withdrawals.
3. Understand the Terms of Engagement In the Policy
Insurance policies tend to differ, thus it is important to read between the lines and be aware of the terms of the insurance policies you choose. This is particularly important for parents that intend to pay for their children’s education via a savings insurance plan. A common mistake made in this aspect is the assumption that a policy that acquires a surrender value over time makes it a savings plan. To make sure that you do not make this mistake check to see if the policy’s terms are able to provide a minimum of two of the three basic requirements needed to facilitate your child’s growth.
Alternatively, Take Up a “Structured Education Plan”
A Structured Education Plan is an alternative offered by various insurance companies which can be quite convenient for individuals who are not well conversant with investing. It is also quite suitable for parents who find time to be a hindrance in making investments towards enabling their children’s education. Currently there are at least 3 unique Structured Education Plans designed to suite different financial needs.
The amazing thing about Structured Education Plans is that they provide guaranteed cash pay outs annually immediately the child begins tertiary education. Some plans provide earlier pay outs, extending to as early as pre-school not to mention additional insurance features. These features include waiving of premiums in the event that the parent is disabled while saving for their child’s education among other such like premiums.
It is therefore imperative to have a well-structured financial plan as early as you can. This clearly helps to ensure that your child’s essentials are taken care of in the best way possible, while still maintaining your financial stability. This helps to avoid financial constraints, mistakes and generally improves the quality of life for yourself and your children.
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