5 things you need to know about education planning
Saving for your child’s education can be a daunting task for any family. Familiarise yourself with the basics of education planning, and it will go a long way in helping you develop an effective education savings plan that works for your family.
It’s never too early to start planning ahead for your child’s education. Life is unpredictable and it’s always best to plan ahead to ensure that your children get the financial support they need to pursue the education of their dreams.
If you don’t want your child to be straddled with debt even before they join the working force, start savings as early as possible to contribute to their higher education costs.
No amount is too small, as long as your spouse and you remain disciplined and dedicated to putting aside the same amount every month. In the long run, it will all add up, saving your child from having to take out massive bank loans to cover their education costs.
Spend time researching government grants and bursaries
Regardless of whether you need the extra help or not, it’s always best to be in the know of government grants or bursaries.
For example, Singapore’s Ministry of Education has a Tuition Fee Grant that subsidises up to 80 per cent of tuition fees for all students in local universities and polytechnics.
Primary and secondary school students who perform well in school are also eligible to receive Edusave scholarships and awards, which could go towards saving for your child’s higher education.
Be prepared for any scenario
While most Singaporean parents would want their children to study at one of our top local universities, there’s no absolute gurantee that your child can get into a local university.
Firstly, competition is extremely stiff and places are limited, especially in the more popular courses. Secondly, your child may develop a passion for a specialist subject like Veterinary Medicine, which is not offered by universities locally.
In this case, you will need to take into consideration the costs of your child studying overseas. This will include housing, transport, food, tuition and, of course, airfare to visit home every now and then.
Be prepared to cut costs
Sit down with your spouse and calculate the amount of money that goes towards non-essentials, like expensive dinner dates, movies or even hobbies like golfing. This is especially helpful for new parents who are transitioning from spending for two to planning for needs of your brand new addition.
Come to a reasonable compromise to cut costs on non-essential activities so that putting money into your child’s education fund won’t have too much of a strain on your pockets.
For example, your spouse and you can start renting out DVDs instead of going to the movies as often, or learning new recipes to try out instead of going for an expensive dinner.
Stick to your plan
If you feel that your spouse and you may lack the discipline to put aside money monthly, it’s best to sign up for a structured savings plan like the DBS MoneySmart Kids plan, which serves as a life insurance plan as well as a savings plan.
This 2-in-1 plan offers the stable returns of with-profit endowment plan, while allowing plan-holders the option of investing in a range of investment-linked funds. Taking up a savings plan acts as a safeguard to ensure that parents don’t stray from saving up for their child’s education.
However, as with any other financial decision in a marriage, you should consult your spouse and make sure they are agreeable before committing to any savings plan.
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