Saving for Retirement or Your Kid's Education?
Talk to any parent in Singapore these days and most likely, the topic of education will come up. Startled by pricey childcare tuition fees and panicking over saving for college, parents at every stage seem to worry about the best way to save money for kids.
As parents, you only want the best for your kid. And no doubt "the best" encompasses providing for their education -- which many parents believe is the most important thing they can do for their next generation.
However, due this this belief, and in the face of rising tuition costs, parents may be putting their own retirement planning at the back seat -- This begs the question: When it comes to saving for your own retirement and saving for your kid's education, which should you prioritise?
Balance is key – How to balance your child’s needs and your own
To help you balance both retirement planning and saving for college, take a look at these steps:
1) Be realistic about your financial means.
As this CNBC article suggests, once your child is in secondary school, be open and discuss what you can afford for tertiary education with your child.
Do not let your pride get in the way of being realistic. It is difficult to feel like you may disappoint your children -- but give more credit to them, and have confidence that if they want something different than what you can contribute financially, they will be able to figure it out. Teaching your child to reach their goals within their financial means is also an important step to success in their adulthood.
2) Start financial planning early.
Financial planning is something that we tend to brush off and put on hold till we get our children’s education sorted. However, the later we start, the harder it will be to reach the financial goals we have. The power of compounding is something that works in our favor when planning and action is taken early. Earlier planning also gives us a longer time horizon for us to tweak our plans to maximize returns.
Financial planning allows you to take charge of your finances. It may seem daunting to take the first step, but the earlier you start, the more likely it is that you will accomplish your goals. Income recognizes that the first step is always the hardest – Speak to an advisor anonymously online today, or check out these infographics and find out more about financial planning for whichever life stage you may be in.
3) Consider prioritising saving for retirement.
As parents, we tend to prioritize our children’s needs above our own. The importance of their future comes way above our financial needs in retirement years. Prioritizing their future is something we can feel proud of – we have fulfilled our duties as parents. It is more difficult to justify to ourselves and our children why we need to strike a balance between our needs and theirs. But as tempting as it may be to put your children’s future first, what your child really needs is for you to take care of yourself first. Being financial independent in your retirement years empowers them to pursue their dreams and ambitions. Prioritize your needs today, so that they can prioritize their dreams in future too.
4. Utilise alternatives, such as government subsidies, to pay for tuition fees.
As much as we feel the need to financially support our children on our own, there are other alternatives that can ease the load and allow us some excess to save for our future.
Tuition fees are on the rise, and takes up a bulk of household expenditures. Thankfully, the Singapore government provides subsidies and financial assistance schemes to make tuition more affordable.
Parents with Singaporean Citizen children enrolled in child care centres licensed by the Early Childcare Development Agency (ECDA) are eligible for a Basic Subsidy. To learn more about Basic Subsidy, Additional Subsidy, and Kindergarten Fee Assistance Scheme, check out the ECDA website here.
With many alternatives to paying for your child's tuition fees, including financial assistance made available to Singaporean citizens through the Ministry of Education, parents can worry less about their children's education opportunities, and focus more on planning for retirement.
Why retirement planning is the best gift for your children
These days, many parents do not have an expectation of having their children take care of them in their elderly years and every contribution they make to us seems like a bonus. However, just as their education is important for their future, so is our financial planning. By ensuring that we’re well taken care of in our golden years, we are providing them with the freedom to choose and forge their paths. Empower them today with more than a winning edge in education – ensure your financial stability so that they can take whichever path brings them the most joy.
Find out more about how to better plan your finances for your family in Financial Planning for Savvy Parents.
This article is meant purely for informational purposes and should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income products mentioned are specified in their respective policy contracts. For customised advice to suit your specific needs, consult an Income insurance advisor.
This advertisement has not been reviewed by the Monetary Authority of Singapore.