Planning for higher education secures your children’s future
Education is an investment; a form of real wealth. It is also expensive. A recent study* suggests that the average university fee overseas is around AED900,000.
Financing for university education can be stressful for parents if you don’t plan or save ahead. Higher education is becoming increasingly pricey and most people, unfortunately, do not always have the funds or resources to pay steep university fees. It is, therefore, critical to plan for college and university expenses well in advance.
Here’s the math
For example, if parents start putting aside $700 (AED2,600 approx) every month from the time a child is born and save it in a fund that gives at least five per cent interest, they can accrue approximately $245,000 (AED900,000 approx) in 17 years – the average amount it costs to put a child through university in the UAE today. It’s no small change; so, careful planning is definitely the preferred school of thought here.
However, if you consider long-term financial planning for education then you should also keep in mind the concept of inflation in context of rippling effect. Although there will not be much difference in inflation during shorter periods (two to three years), there could be a startling difference after 15 to 17 years, which could mar your entire financial planning.
Therefore, it is not advisable to keep the current financial trends as a benchmark when planning for something occurring after 15 to 17 years. For example, if the average university fee in the UAE is AED900,000 today, then it could go up by 20 to 25 per cent, so it is important to bear in mind the rising concept of inflation, as well as weakening currency.
Numbers can be intimidating, but there are many ways to get ready for these expenses.
Plan as early as possible
Start saving early. In fact, there are quite a few programmes that you, as a parent, can use to save for your children’s education. These range from basic plans that spread the cost of college across a number of months to sophisticated investment solutions that take advantage of financial markets. Such programmes are well worth considering as they will enable you to finance your children’s education without incurring any extra cost or debt.
Be prepared for the worst
However outstanding your children’s academic track record may be, it is not advisable to count on their ability to secure a scholarship. Universities are becoming increasingly competitive and scholarships increasingly difficult to secure.
Making the right financial arrangements today will ensure that your child’s higher education is decided on ability, not financial standing. Planning in advance means financial freedom for you and a step on the career ladder for your child.
No compromise attitude
Having a good university degree is a passport to a successful career. Most parents want the best education for their child to enable them to start their career with a competitive advantage. Of all the benefits you can provide, none has a more lasting value than a good higher education.
It is natural that most of us want our children to make the most of their learning opportunities. And to give that crucial opportunity to your child, you must take a “no compromise attitude” when it comes to planning and investing in education.
Share with your child the family’s financial situation; not only will this help them have a greater understanding of how the ‘real world’ works, they are also more likely to be considerate to what you can and can’t do for them, financially.
Many first-year university students get part-time jobs to help with rent and food bills, while others choose to live at home. The important thing is to discuss and decide as a family.
Clear academic goals
It also helps to have clear academic goals. What does your child want to do? Become an engineer or a veterinarian? IT professional or a musician? Or is it an MBA that your child is after? Are they looking at continuing education after university? Setting these goals early on will help provide a clear roadmap of where you child is heading and help you budget for it too.