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.
While They’re in Elementary/High School
Give them the ability to contribute.If it doesn’t get in the way of studies, teens can be encouraged to work part-time, and set aside part of their earnings for their college fund. They’ll feel more fulfilled and motivated to finish college, knowing that they contributed to their own education.
Go through your options together.If you don’t know how to help your child choose a college, just try your best to be realistic. How much can your family really afford to spend on college education in the future? Talk about the total costs to expect with your child and work out a solution together. For example, you can look at various financial assistance programs offered by different colleges.
Research available scholarships.Ask your preferred college if they offer scholarships and what requirements they have. Some colleges offer free or reduced tuition for exam top-notchers or those who maintain a certain graded average. There may even be independent organizations that offer scholarship programs for gifted students.
As long as you map out your child’s college education plans, you’ll slowly but surely make your way to your goal. If you’re still unsure though, browse through our different financial plans and we can help you pick the one that can help you meet your goals.