Most parents are unwilling to compromise on their child’s education. EL chats to ANDREW TALBOT from Expat Financial Planning about how to be financially prepared.
When is the best time to start saving for your child’s education?
As early as possible! Sometimes, education planning may start off as a saving plan dedicated to something else, even general savings, and then morph into an education plan. As an example, if you start saving $1,000 a month for a one-year old today, the total could exceed $400,000 within 20 years.
Can you give scenarios of typical education costs?
Our figures estimate the average yearly school fees at Singapore international schools from age four to 16 to be $27,500. That’s a total of more than $357,000 from preparatory to high school. For university, see the table below:
What are the different education saving products on offer, and what can parents expect to contribute each month?
In essence, an education plan is an investment, or cash amount, that is set aside for future education fees. This could be a large lump sum portfolio, cash in a savings account, or a dedicated saving plan. In Singapore, different international savings plans for education fees are available. These generally start at around $675 per month. Also consider options in the home country of the school or university. For instance, the US has dedicated plans that are extremely tax-efficient. Some schools have their own internal schemes; these usually involve payment of upfront fees, but you receive a discount.
What are the advantages of a specific education saving scheme over other investment products?
Having a dedicated education plan can take the pressure off finding the money when it’s needed to pay education fees. But we think it’s prudent to also look at using other family investments to withdraw fees from; this can save on transaction and administration costs.
How is the money released to parents when it comes time to pay the bills?
Depending on the structure of the investment, it’s normally withdrawn when it’s needed. Again, particular education institutions may accept payment upfront and grant discounts on early payments.
Expat Financial Planning, 2 Battery Road, #26-01, Singapore 049907 Tel:6632 8537