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Setting Your Child Up for a Successful Overseas Education
Get your child (and your bank account) ready for an overseas education.
The benefits of an overseas tertiary education are numerous – greater independence, advanced problem-solving abilities, interrelationship skills with people of different cultures, worldly mind-sets and broader career opportunities. As parents who want the best for your children, you may already be saving up for tuition fees. However, it can be difficult to know how much to save and how to set your child up for success abroad. Here are a few tips to keep in mind:
Instil independence early
Train your child to be independent from a young age by showing them how to take care of themselves and delegating certain household duties. One way is to give them opportunities to make their own decisions, like what they wish to wear or what extracurricular activities they want to take up. Encourage them to take ownership of their learning at school by asking them to evaluate their own progress and whether they need help or not. Let them pick up some basic chores too – putting away their toys when they are young and helping to make dinner or do laundry when they are older. And, as always, give them a healthy dose of affirmation, as research shows this helps children overcome challenging situations when they grow up1.
Take stock of your current savings
When saving for an overseas tertiary education, the first step is to find out the value of what you have already put away. Calculate the current savings from your bank, endowment policy, unit trust and any other investments / savings you may have. Then estimate what each will be worth when your child turns 18 or 21. You’ll need to make some assumptions in your calculation, including the expected rate of return and inflation. Reach out to your financial advisor if you need guidance. This will give you an idea about how far your current savings will get you.
Create a workable savings plan
The next step is to estimate how much tuition is likely to cost when your child is ready for overseas tertiary education. Analysts estimate that in 18 years’ time, a four-year degree at an American university will be over US$200,0002. Calculate how much more you will need to save to make up the difference. Once you have a rough idea, you’ll know how much to set aside every month and what rate of return you’ll need. This information can guide you in deciding the appropriate investment strategy to achieve your goals.
When planning for the future, it is tricky to predict exactly how much you’ll need to save by when, but with these steps, you are far more likely to get it right. Remember to review the value of your savings regularly and adjust your plans as you go. By starting early and keeping an eye on your progress, you’ll be able to set up your child for a bright future.
1 Source: https://www.family.org.sg/FOTFS/Blog/Parenting/Ways_to_Empower_Your_Child_to_be_Independent.aspx
2 Source: The College Savings Estimator, Invite Education, LLC, July 2019
Source: BlackRock x Yahoo! #InspiredtoInvest. July 31, 2018.