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4 Tips on Preparing for Your Child’s EducationNow that your baby's born, here's what to expect after expecting.
Photo from childrensprize.org
A new baby means exciting times ahead, and a new chapter for your family, but it also means new needs to prepare for, starting with baby bottles, diapers, and toys. For Amor Balagtas, Chief Marketing Officer of AXA Philippines, one of the largest life insurers in the country, parents of newborns should include “preparing for education” on their post-delivery lists, to give their money enough time to mature and sufficiently cover this need.
Here are her tips for new parents on securing their child’s education needs:
1. Determine how much you need to save—and commit to it.
Preparing for a child’s education is similar to preparing a birth plan. “An education plan works the same way as a birth plan,” says Balagtas. “In the same way that parents have a good idea of whether they will deliver naturally or undergo a caesarian section, they should have a clear picture of their current financial status and how much they need to set aside regularly for their child’s education, and how much time they will need to allow their money to grow.”
With the help of a financial advisor and AXA’s Financial Needs Analysis (FNA) tool, parents can get a better estimate of how much they will need to set aside—and for how long. “The tool allows parents to develop a plan that fits their current income and their needs,” says Balagtas. “It can also take into consideration other future expenses, such as allowances, school supplies, or miscellaneous fees.”
Moreover, the tool also projects inflation rates and tuition increases, so it gives a greater imperative for parents to commit to longer-term planning. “Parents must realize that education is an investment,” Balagtas points out. “Quality tertiary education does not come cheap, and parents must be able to commit to the amounts that they must regularly set aside to prepare for their child’s education.”ADVERTISEMENT - CONTINUE READING BELOW
2. Start saving now.
Balagtas believes that the best time to save up for education is when a child is 0-6 years old. Saving up during a child’s early years will give parents a head start and help them avoid falling into debt because of rushed financial decisions.
“The cost of college 10 to 15 years from now can be as high as P2.5 million for four years of college,” says Balagtas. “If you start saving up now, you can rest easy knowing that you have something tucked away when you need it.”
Life insurance companies offer variable unit-linked (VUL) products, where a portion of the premiums is invested in bonds or equities, which provide faster, more aggressive growth as opposed to bank deposits or traditional life insurance plans. These plans are also affordable for as low as P1, 500-P4, 500 per month. Other plans offer a combination of VUL with riders or add-ons, which give your children a contingency education fund in the event of a parent’s untimely demise.ADVERTISEMENT - CONTINUE READING BELOW
3. For a child’s baptism or first Christmas, consider a start-up fund for education.
If your child’s ninongs and ninangs have asked for gift ideas, why not suggest a pool for the first year of your child’s education plan?
It will take some planning, and some help from the parents, but this can be done. “The best gift that could be given to a child is the gift of education,” Balagtas says. “Having a plan that would secure a child’s future education needs is a concrete way for parents and godparents to ensure that a child would reach his or her full potential.”
4. Don’t be afraid to research schools and ask friends and family about their experiences.
Balagtas assures that parents have enough time to start saving. One of the things that can help them as they plan for their child’s education is to call or visit schools and talk to them about their fees and other related expenses.
“Parents can use current tuition and miscellaneous fees as a starting point,” she explains. “They can find out the kind of education that they would be getting for the amount that they would pay, and from there, they can decide the best possible option for their child.”
Balagtas adds that researching for schools can help parents identify various payment methods and schemes in their dream schools, which may also be factored in their planning process. Starting contact with schools may also turn into invitations for summer programs and open houses, which could reveal a child’s talents and interests and potential expenses, which parents would also have to consider.
Planning for your child’s education is as important a milestone as his baptism or his first birthday. With research and proper financial education, securing your child’s education can be as easy as his ABCs and 123s.ADVERTISEMENT - CONTINUE READING BELOW
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