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Why you should start saving for child’s education right NOW.
Financial Consultant Natalie Storey says planning ahead and starting saving early will allow any parent to put their kids through school with little worry.
September 12, 2012 1:15 by kippreport
Children are the most previous gift we can receive in life; as parents we want to make sure they get the best chances and experiences in life. Living in Dubai, most people are aware of the cost of schooling their children; this can cost anywhere in the region of Dh30,000 – 50,000 per child. However, with many expats,this can often be tied in with the employment contract and will not be an obligation to worry about.
However, have you thought about further education and the cost of going to university post eighteen? Would you like to see you children excel and obtain a degree? As a parent, this is something you will need to fund, or a student loan will need to be taken out to cover the university cost. In the UK, for the academic year 2012/13, tuition fees have gone up to £9,000 p.a. (Dh 53,1259), This alone will cost £27,000 (Dh159,377) if you stay at university for three years and a four year degree (a Master’s) will cost £36,000 (Dh212,000) in tuition fees alone. As for accommodation, the average cost is £4,500 p.a. (Dh26,562) not counting food, entertainment and travel cost. This could easily cost between £60,000 -70,000 (Dh354,172-Dh413,201) for a three year course and a further £20,000- £25,000 (Dh118,057-Dh147,572) for a four year course. This is Money reported earlier this month ’student debts to escalate as average cost of three years at university soars to more than £53,000 (Dh 312.852) ’.
Universities in America fees are even more expensive and you can look to pay $50,000 p.a. (Dh183,645) for sending your child to the top university. This will be a big burden to many people, especially the more children you have to support. Consider that when your child reaches further education age chances are you will be approaching the later stages of their career and will want to focus on retirement and not further expenses for their children’s education.
If you plan ahead and start saving early, you will be able to achieve the desired amount you need for further education, with little worry. For instance, if you start an Education Saving Plan when your child is born, for 18 years, you will only need to contribute £250 p.m. (Dh1,475) to achieve £80,000 (Dh475,230) in 18 years’ time (with assumed growth rate of five percent p.a.). However, if you leave your planning till your child is 13 years old, you will need to contribute over £1,250 p.m. (Dh7,378), for five years to achieve a pot of £80,000 (Dh472,230). This is a considerable difference.
This is an expense that every parent will have to plan for, so make sure you contact a financial advisor to help plan well in advance and avoid being caught out.
-Natalie Storey is a Financial Consultant at Acuma – Independent Financial Advice