Thursday, August 14, 2008

Education Planning

My daughter is 7 years old and son is a toddler. Que sera, sera! However at the very least, for bringing them to this crazy crazy world, I vow to save enough for their education.

Education will not get any cheaper. With the ever rising cost of living, parents are facing tougher challenges to look for ways to fund their children’s education. If there is a will, there is definitely a way.

Some start planning the moment the children are born, others when their children complete secondary school. Some like it hot. If you are left out, don’t be despair. Just do it now. There are many tools to achieve this objective. Read on, some hot tips.

Jolie bought an apartment, rented out for many years before selling it off to finance her eldest child’s education. The monthly income from rental was regularly invested in unit trust which is geared for the younger child’s education. If unit trusts are carefully monitored, the returns are very attractive. The returns can be as much as three or four times higher than fixed deposits. Investing in properties and unit trusts are both ways to hedge funds for education.

Pitt did not encourage his children to apply for study loans as he didn’t want them to start working life with a financial burden. Instead he bought insurance policies when they were born. Although he can’t plan for the full cost of the children’s education but some planning is better than nothing.

Hisham plans to withdraw money from the Employees Provident Fund (EPF) account for this purpose.

The above examples are not the only avenues. One of the keys is to have a good “basket of eggs”. Other options include buying foreign currency and investing in shares.

Parents should seek help when investing. Some don’t know what to do with the money they’ve set aside. They put them in fixed deposits, the returns which are probably lower than the inflation rate, thus effectively losing the value of the money. Some who are well versed with financial matters may invest in properties overseas, especially in the country their children intend to study in. By doing this, they cushion themselves against fluctuations in foreign exchange and the child can live there when he is studying.

Parents should also involve their children in their financial planning. The ‘don’t let the children know, we can handle it’ mentality is old school. Share with the children on the family’s financial resources. The children could also share some of the financial burden by working part time. This move will give them insights on the rough and tough of the rat race.

No comments: