Saving for education is just one of those things we cannot seem to compromise on. Giving your kids a good education is one of the best gifts a parent can give. At the same time it’s a huge financial obligation, especially here. Pre-school seems to cost as much as school! Well if you’re a parent who’s not going to compromise on education then there is only one way to tackle the finance part of it – get ahead of the game.
Prepare and start the budgeting for pre school, nursery, primary and junior school, college and university. Putting little amounts away for longer periods is far easier to manage than ‘last minute’ anxiety and stress about pulling out school fees and paying for everything else at the same time.
Many parents find themselves in sticky situations trying to keep up with the fees especially as they keep going up at a ridiculous rate. What ends up taking the hit is your reliable friend ‘the credit card’. This can be a dangerous game – before you can pay off the first set of fees the second lot is due. It’s a common route to long-term debt.
So here’s how to get ahead of the education game:
1) Start putting a monthly budget away
Even if your baby has not even started pre-school or nursery, find out how much it will cost for the whole year. Now divide that amount by 12 months to work out how much you need to put away. No matter what school year your child is in, you need to set it aside monthly.
2) Open up a separate bank account and call it ‘SCHOOL FEES ACCOUNT’
By having a separate account will ensure that you do keep this money aside and your more unlikely to spend the money on other expenses that seem to keep popping up.
3) Automate the transfer
Make it easy on yourself. Set up your automated bank transfer to go out from your salary account on a set date every month. You can simply do this through your online banking in a few clicks.
Continue this strategy for their whole schooling life.
According to The National, average school fees in the UAE ranged from Dh22,042 in the Indian school system to Dh50,678 in the British system, with year 12 annual fees as high as Dh94,215 in 2015.
4) At the SAME TIME start putting away for university fees
According to recent research from HSBC, Australia is the most expensive country for overseas students to study in. The USA is the second at more than USD35,000 per annum and the UK is third at more than USD30,000. For a four year degree it’s a total of USD120,000 per child.
Start saving for this now. Saving $400 per month (AED1,500) for 17 years could give you over $150,000 when your child is ready for university, assuming 8% return on investment.
Work with a financial advisor but make sure they come recommended by someone you know who uses them. Building a trusted relationship with your advisor is the key to choosing the right one for you.
People don’t plan to fail, most just fail to plan.
By Rasheda Khatun Khan
Wellness & Wealth Expert, Kinesiology Practitioner
Rasheda has been inspiring thousands of people across the globe for over 8 years. With her corporate financial background, mastery in leadership & mentoring and her gained wisdom from healing herself from cancer, she has become a leading expert in personal wellness in the areas of financial wellbeing, increasing your vitality and KinesioCoaching.