Find out how much you'll need for your child's future education and how to prepare for this big expense.
CREATED WITH CITIBANK
Fact: Education in this country can be expensive. While parents aim to give their kids the best education at the top universities, it's a struggle to raise college funds from monthly salaries alone, especially since college tuition fees have been steadily increasing throughout the years.
Case in point: In 2008, the annual tuition at a top university in Quezon City was P90,613; today, it's around P200,000. Most schools follow the same trend, so the cost can be overwhelming. Knowing this reality is the first step in determining your plan.
Your baby may have a long way to go, but it's best to see how much you'll need to save over the next 19 years or so, on top of the cost of your child's basic education. The sooner you start planning for it, the better. Here are some tips to get you started:
1. Know the figures.
Knowing the actual figures will give you a headstart on how much to save monthly, quarterly, or annually. With the present annual college tuition of P100,000 and following the estimated annual tuition increase of 12.25 percent, by the time your 1-year-old goes to college at 19, tuition will be at P800,487 on his first year. The total target education fund is at P3.8 million.
To compute for your child's future tuition, ask for the current tuition of your target school, determine the rate of tuition increase each year (around 10 percent), figure out the number of years until your child enters college, and plug the numbers into this calculator.
2. Save as early as possible and learn to budget wisely.
Saving may not be your priority now as a young family, but the younger your child is, the more time you have to set aside some money, and the faster you'll be able to come up with the fund.
One way to save is by setting a budget for your household. Having a budget is not about depriving yourself but about being financially secure. An education fund should be set aside from your family's fixed monthly expenses such as food, rent, and utilities. Try setting up a separate account for your child's college fund so it will not be touched until necessary.
The goal is to maximize the interest that you can get to beat inflation. You can put your money in time deposits earning 2.41 percent per annum, but you can also put it in variable universal life insurance or mutual funds that potentially earn 8 percent and up per year.
5. Try a personal loan from a trusted bank.
If you think it's too late to build a college fund or if you're struggling to meet your target, you can get financial support with a Citi Personal Loan. The approval of your loan request is as fast as 24 hours with flexible terms of one to five years. Aside from using the loan for your child's education fund, you can also use it to grow a business, go on vacation, or for a family emergency.
Achieving your educational fund is entirely doable as long as you stick to your plan, live within your means, and stay out of debt. It's a small price to pay for a bright future for your child.
The "loan" wait is over. To apply for a Citi Personal Loan online, go here.
This article was created by Summit StoryLabs in partnership with Citibank.