Money for Child’s Education | How to Save for Child’s Education?

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Singaporean parents hope that their child will eventually perform well enough to gain admission to a reputable institution. And enrol in a degree that will provide them with a nice future. For that objective, parents are willing to pay exorbitant tuition rates. However, once your child has completed his A levels you may realize that university tuition fees make private tuition rates appear like pocket change. In this blog, we tell you how to save money for child’s education in Singapore.

Every year, you’ll be paying nearly a five-figure sum. And if your child is not admitted to a nearby public university, you can forget about obtaining a CPF tuition loan. There are alternative choices, such as having your youngster obtain a bank loan to fund his own studies. However, many parents do not want their children to begin their careers in debt when times are already bad. This is why Singaporean parents spend an average of $21,000 per year on their child’s university education, with more than half willing to go into debt for it.

How to Save Money for Child’s Education

Begin Planning Early

University education can cost as much as a home in some nations. Especially, if your child studies overseas in an English-speaking country. Just like you must prepare ahead of time when purchasing a home, you must begin saving for your child’s education as soon as possible. The earlier you begin, the more room you will have in your budget for your child’s university fund.

Make it a Priority to Include it in your Budget 

It may be 20 years before your child is ready to attend university. But you should start planning for it now. Saving a tiny amount over time is far less stressful than trying to save the entire amount in a few years. You may have to make some compromises, such as foregoing purchasing the latest iPhone and iPad for your child. Or going on extravagant family vacations twice a year. However, it is preferable to make these sacrifices now than later realize you should have.

Pay off your High-Interest Debt as soon as Possible

If you have high-interest debt, such as credit card debt or personal loans, you owe it to yourself and your child to pay it off as soon as possible. If necessary, put your family on a budget for several months. This debt can cost you a lot of money in interest and can quickly spiral out of hand, putting a damper on your child’s college plans.

But Don’t be so Hasty to Pay off your Mortgage

When it comes to your home loan, though, paying it off early is not always preferable. Avoid paying off your home loan early if it means you’ll have to borrow money to pay for your child’s post-secondary education in a few years. The interest rate on a home loan is substantially lower than the interest rate on a student loan.

Even if education is a long way away, it may make more sense for you to invest your spare cash rather than use it to pay off your home loan early. Because you may likely earn a larger return on your investment than current home loan interest rates.

Invest the Money rather than Put it in a Savings Account

One advantage of starting to save as soon as feasible is that you’ll have more time to invest and allow your money grow. So devise a strategy for investing your child’s university cash over time. Don’t forget to keep an eye on the investment and possibly relocate the funds to a lower-risk vehicle closer to the time when you’ll need them.

For example, you could choose to invest the funds in stocks and then withdraw them gradually a few years before they are needed. You can then invest the money in a low-risk investment such as a fixed deposit a year or two before your child is ready to attend university.

With these simple tips, you can start early and save money for child’s education in Singapore. 

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