Budgeting Education Saving Up

Securing Your Child’s Educational Future: A Guide On How To Start

byEwen Boey
  • Feb 23, 2024
  • 5 mins
mother and daughter laughing

Planning for your child’s education is stressful. In Singapore the mere thought of it is enough to give some of us a mild panic attack.

That’s why we’re here to help make things as stress-free as possible.

As a parent or parent-to-be, planning out your child’s educational future is essential to ensuring your finances are healthy even when it’s time to fork out large sums of money for your child’s tertiary education.

Not sure where to start, or what to think about when making these plans? Don’t worry, we’ll guide you through taking that first step (and subsequent ones) to ensure you’re more than ready to meet your child’s educational needs in the future.

Wait, aren’t we talking about providing for your child’s future education? Why is it about you now? This can seem a little counter-intuitive, but do hear us out.

As parents with dependants, your own financial well-being is key to managing your family’s finances. Should anything happen, such as unexpected medical expenses or financial instability from losing a job, then your means of supporting your family can be significantly impacted.

So while your child’s education is undoubtedly important, it’s essential to first have a “backup” for yourself, so your finances and savings are protected from unexpected hiccups.

Manage The Spending On Your Child

One thing that parents often overlook is their current spending on their children with regards to tuition and extra-curricular lessons. While providing your child with the very best is ideal, it must be balanced out by whether it makes financial sense in the long term.

Do weigh out the costs of different tuition centres, and also manage the number of extra-curricular activities your child attends to ensure you have enough saved for their future in addition to cover your family’s daily expenses.

Education is costly, and expenses are expected to rise in the future, at the very least due to inflation.

So while it may seem like it’s 15 years too early to be planning for your child’s university education, starting early and preparing yourself for the future outlay will take away a lot of pain when the time comes.

Let’s do some simple calculations to illustrate this.

If a local university course costs S$40,000, then saving early with a monthly outlay of S$300 at an interest earning rate of 4% annually, for 15 years, can potentially cover most of the cost of 2 children’s education.

Year 1: S$300 x 12 months x 1.04 = S$3,744

Year 2: (S$300 x 12 months + S$3,744) x 1.04 = S$7,637.76

Year 15: If we continue these calculations, you’ll end up with an amount of S$74,968.31.

In comparison, if you start 5 years later and save at the same rate for a period of 10 years, then you’ll only have S$44,950.87 at the end of the term, which might only be able to cover 1 child’s education.

mother and daughter

Scoping out possible education paths and costs

While your child is a long way from their tertiary education, it’s always good to have a vision in mind to start your planning.

Granted, you might be unsure at this juncture if your child might be better suited for local or overseas education. Beyond the dollars and cents, don’t forget to consider these other key points here.

Normally, an overseas education is what will drain your finances if you’re unprepared. If the time comes where your child wishes to apply for overseas universities, you would not want finances to stand in the way of your child’s goals. As a first step, search online for the approximate cost of tuition fees in popular countries such as Australia, the UK, and the United States. Remember to also factor in costs for accommodation, insurance, and living expenses. You might also want to refer to our comprehensive guide on how much to budget for an overseas education, but bear in mind that these figures are subjected to inflation till the time your child enters tertiary education.

Even for those who prefer tertiary institutions in Singapore, costs could differ depending on whether you choose a local or private university – do check out current and previous years’ course fees as an estimate. Following which, take a prudent estimate of annual inflation rate, to calculate how much your preferred course might cost by the time your child enters university.

Evaluate your savings options to reach your savings goal

Once you work out approximately how much you need, evaluate your savings options to understand the gap you have. You can then easily work out how much you’ll need from an insurance savings plan to send your child to an overseas university. Uncertain about saving so much only to not need it for your child’s education down the road? No worries, at least you know you’ll still be able to use this saved up sum of money elsewhere, or even reinvest the maturity proceeds.

Now that you have a figure in mind, it’s time to find the right insurance savings plan for you.

Insurance savings plans, also known as endowment plans, are designed to offer both protection benefits and savings. This means that such plans not only include a life protection component, but are also able to accumulate a cash value over time.

A crucial consideration in all of this is your risk appetite. If you’re not looking at a high-risk investment or it’s your first time dipping your toes into investing, then a plan like Gro Cash Flex Pro could be a good place to start.

This plan provides a peace of mind with guaranteed capital1 upon maturity — this means that you can get back at least all of the premiums that you have paid once the plan matures. This makes it an ideal low-risk option for your child's education savings.

There is also the flexibility of how long you wish to pay for your premiums, and the subsequent number of years of your policy term. This will depend on your own lifestyle and financial situation and goals.

To maximise the benefits of Gro Cash Flex Pro, consider the following pointers:

  1. Explore additional riders — depending on your needs, consider adding riders to enhance the coverage of your policy, such as Savings Protector Pro2 that covers Total and Permanent Disability (TPD) and retrenchment, or Cancer Premium Waiver (GIO) rider that waives future premiums in the event of diagnosis of a major cancer during the rider term3.
  2. Start early — This is something we’ve mentioned above, and we can’t stress how important it is to allow more time for your money to grow through compounding.
  3. Review regularly — Review and adjust your insurance savings plan periodically as life circumstances and financial priorities may change. You can connect with our advisors to tailor the plan to your ever-changing needs.

Time is of the essence - kickstart your savings journey today to set aside a comfortable sum for your child’s education. Get a quote now, or connect with our advisors to explore a plan that’s right for your needs.

Ewen is a seasoned content specialist with over a decade of rich experience in digital content. From weaving captivating narratives to devising impactful content strategies, his journey reflects a deep understanding of engaging readers at every level. 

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