Every parent dreams of one day attending their child’s college graduation. Once your kid earns a diploma, they’ve mostly secured a stable and promising future career.
However, a good education can come at a steep price. As of 2019, it can cost an average of P145,000 a year to send your kid to a good college. You also have to factor in food, lodging, transportation, and other miscellaneous expenses.
Fortunately, financing a future college education can be surprisingly affordable, as long as you prepare the groundwork long before your kids are ready for college (or even before you have kids). Here’s a simple road map that you can follow.
Before your child is born
Start saving for their college fund.Build that fund now, but keep an eye on the potential cost of tuition and other expenses when your child reaches college age. Research your target college’s tuition fees, along with additional expenses such as food and transportation. Add these all up and you’ll have an idea of how much you need to save.
Factor in the cost of inflation.Remember that inflation causes the value of money to depreciate over time. Multiply college expenses by 10% per year to take inflation into account. For example, if the first year of college costs P200,000, the next year will cost P220,000. The year after that will cost P242,000, and so on.
After your child is born
Get life insurance for yourself and your spouse.Life emergencies could severely deplete funds meant for your child’s college education. It’s wise to look into life insurance to cover your child’s needs should the unexpected happen to you. You could also invest in an educational plan bundled with life insurance, such as AIA Philippines’ Future Scholar plan.
Go for long-term investments.Put your money in long-term investments appropriate to your appetite for risk—bonds to play it safe or stocks if you’re feeling aggressive. Whichever way you go, the more funds you have in the future, the less limited you’ll be in deciding how to choose the best school for your child.