Saving for Your Children’s Education

Why is it necessary to start saving for your children’s education fees?

It is often said that the only true asset you can give your child is a good education. For many parents, all they desire is that their children are healthy, happy, and have better opportunities than they had when they were growing up. And today, perhaps more than ever, the key to these opportunities is through a good education.

But the cost of providing an education today is no small matter. So most parents begin saving as early as possible in order to have enough capital to pay school fees, buy uniforms, books, school equipment and other costs. Of course as children grow up, these costs increase, so it is important to have a strong savings plan in place.

Education fees tend to increase by more than the general rate of inflation and therefore, any effective plan needs to be predicated around returns that exceed inflation, while also delivering a fixed income requirement with certainty. Many couples are having kids later in life and they also want to retire earlier than previous generations. This means that, in many cases, the primary income-earning years may have ceased before their children finish secondary or tertiary education.

Private School + University = Better Pay for Your Kids

The Economic and Social Research Council carried out the following study on behalf of the UK government. Hundreds of children who started their secondary education in the 1980s were closely monitored. The Council came back with some astounding results:

Those who went through the privileged education system and traditional universities were FOUR times more likely to earn more than £90,000 a year in their thirties than those who attended ‘new’ universities (ex-polytechnics); most of whom were paid less than £30,000 per annum.
From those who were classified as the top earners, over 85% had gone to private schools, whilst 61% of those being paid less than £30,000 had gone to state schools.

Planning for the Cost

The bad news is, if you want your children to attain these heights, then you are going to have to pay for it. The phrase, “Ready, Willing and Able” comes to mind.

Ready – Without a doubt, “Knowledge is Power” and higher education is a basic prerequisite to acquiring a good job. It is the key to open the door to a professional career. Many parents will consider the cost of private education as a lifetime investment in their children’s future.

Willing – If you are living overseas, then a private education may well be a requirement much earlier than if you stayed in your own country. Whilst education is an investment for your children it does not come cheap and unless you planned for it, it could mean:
- Re-mortgaging the family home to pay the fees or borrowing from a bank.
- Depleting present savings and retirement accounts.

Able – Assuming that you start to save as soon as your first child is born (or, even better still, before), we estimate that educating each of your children will cost in the region of USD 300,000. This figure assumes that each child will commence nursery school at the age of two and will continue through to a university degree and education fees rise by an average of 6% per annum.

This is for private education here in Thailand and then foreign tertiary education.

The earlier you start saving the less you will have to pay on a regular basis, however small, is better than nothing.

One of the most important issues is security. In other words, the knowledge that, irrespective of global or local economic conditions, your child’s financial needs will be met. These plans should be safe, not speculative. They should be based on good, solid returns from substantial, reputable companies based in safe and secure jurisdictions, which will protect your investments.

These products should also offer the security that, if anything happens to you such as death, critical illness or long-term unemployment, your child’s education remains provided for. For this reason, many educational fee programmes are actually a combination of investment and insurance.

Contact MBMG if you would like any advice regarding saving for your children’s education now.