Changes in the world over the last year have made many people financially insecure. Beyond struggling with bills and expenses, they must also try to continue to manage lifelong concerns, such as providing their children with a solid education.
A great education throughout a child’s early, secondary and tertiary academic years makes it possible for them to grow into a confident, self-sufficient adult who can better manage the obstacles life throws in their way.
This guide outlines with clear steps five tips for planning an education fund for your child. Given the increasing costs of not merely education but every aspect of life, saving for your child’s education by establishing a children’s education fund is critical to guarantee that they receive a great education and, as a result, the best opportunities to achieve a life of success.
In This Article
1. Start Planning and Investing Early
When someone tells you to start now, you might feel like this is an obvious, unhelpful statement. Isn’t it obvious that parents start as early as possible and are financially feasible? Yet, many parents believe that they have “time” to wait until their children are nearly ready to receive formal early or primary schooling before they start to prepare financially for their child’s secondary private education or career-focused tertiary one.
If you can begin to plan and save while they’re still extremely young, then do so. Years pass all too quickly. You have a better chance of saving up enough money if you start during their first year of life or no later than when they’re two or three years old.
Even if you only put away a small amount of money from every paycheck into a piggy bank for the first year to then later transfer to a formal financial institution to build interest, you’re one step closer than if you didn’t save any money at all.
2. Take Out an Insurance Policy
Your entire world can be turned upside down in the space of a heartbeat. A manmade or natural accident or other emergencies can cause permanent disability or death. It’s a hard thing to hear, but it’s an inescapable fact.
Several worker’s and life insurance policies payouts to beneficiaries after permanent disability or death, which means that you can cover the cost of your child’s education even if you don’t have enough money saved after an emergency scenario leaves you physically incapable of performing the work necessary to invest and save.
Policies pay medical and funeral expenses so that your loved ones don’t have to spend money already saved for your child’s education to cover these costs. Many policies provide more than enough money to cover expenses and even an extra investment into your child’s education fund.
3. Reduce and Pursue Debts
Any type of debt you owe or that someone owes to you can impact your ability to save money for your child’s education and other areas of your life. For example, you might not realize that companies can’t legally pursue statute-barred debt or maintain it on your credit file once the limitation period for reclaiming that debt lapses.
On one hand, you benefit from these rules if you owe outstanding money. On the other hand, you can lose money to put toward your child’s education if someone else owes you money for products or services rendered and you fail to make a timely debt recovery. Always find out the status of your current personal and business debts and reduce any you owe and pursue any money owed to you before it becomes barred debt.
4. Research Potential Options
Before you set up a tuition fund, you should research the costs of education. You need to decide if you want your child to go to a government public school or a private one.
Even if you choose free early education for them, you might still need to cover extra school-related necessities, such as textbooks, stationery, and writing instruments, a tablet or laptop for in-class use, and a uniform. The school administration might also ask you to make donations from time to time in support of the school. Of course, if you choose private education, you need to establish a children’s tuition fund for yearly education costs and possible boarding fees.
If you want to help your child with their higher education, then you need to take into account the current fees at potential academic institutions. Always ask school administrators how much of a cost increase they typically experience year-to-year so that you can make long-term estimates.
5. Create an Investment Strategy
Once you have a rough idea of the potential cost of your child’s education, then it’s time to come up with an investment strategy. Plenty of financial institutions and organizations are available to provide guidance. Although you might consider a standard savings account, other options exist that offer long-term benefits, including managed investments, investment bonds, and education bonds.
A simple online search using your current location and these investment types as a keyword phrase can provide you with information about the options available to you. Keep in mind that if you think that you won’t be able to save enough to cover your child’s education completely, governmental programs exist to help parents cover at least basic early education costs. Additionally, apprenticeships can make it possible once your child leaves secondary school to receive an education and follow a career path while in the work world.
Although this guide doesn’t cover every possible tip for planning your child’s education fund, it provides you with the primary steps you need need to take, such as starting early, preparing financially for catastrophe, researching and estimating costs, and then following through with making an investment. It might all seem overwhelming, especially if you’re a first-time parent or investor or struggling during hard times. Yet, it’s worth it for you to begin today. An education fund plan can help protect your future personal finances. It can also guarantee that your child possesses access to an educational foundation that one day supports a career that helps to protect their health and wellbeing for the rest of their life.