This post first appeared on Parentology.sg.. follow to read about Financial Planning for Parents!
Raising a child is one of life’s greatest joys but studies have found that for all the joy that children bring to your life, they will also cause some stress. While this may be debatable, the fact that modern-day parenting presents a whole new set of standards, dilemmas and challenges is no longer a secret. One of the main challenges that you will face as a parent is the rising cost of living and living in the most expensive country does not help either. In this article, we break down the amount of cash that you will need to raise a child and discuss some of your options.
What it costs to raise a child – Education
Toddlers To Pre-Primary
A lot of people think that childcare for toddlers is the least expensive. With a median cost of more than S$1000 per month, it is apparent that childcare is quite expensive in Singapore. It is also worth noting that the younger the child, the more expensive childcare will be. The amount of money it takes to take care of a child ranges from S$450 to S$5400 per month but S$450 is the average if you exclude infant care. This does not include other factors such as food, clothing, doctor’s fees, toys and miscellaneous expenses. With inflation such as the recent 120% increase in milk powder, expect to spend at least S$36000 for childcare.
Primary Through Secondary Education
In primary school, the school fees are largely subsidized by the Ministry of Education (MOE). This is in a bid to improve literacy levels among the locals. School fees for Singapore citizens is free in government and government-aided institutions but this does not mean that you won’t spend a dime. You should expect to pay more due to the increasing variety of lessons and extra-curricular activities such as field-trips. The basic cost necessary to complete education, both primary and secondary, in Singapore averages about S$2,136. With other miscellaneous expenses added to this, you will likely have a higher figure.
The cost of tertiary education is much higher than the lower education levels in Singapore. A Singapore citizen would pay about S$2,900 while international students are expected to fork out S$10,400 in annual fees. Other expenses would include sports, insurance, miscellaneous fees, statutory license fees and student union fees. University students, on the other hand, enjoy generous grants from the government and pay subsidized tuition fees ranging from S$10, 000 – S$150,000. This, however, depends with the course of study and duration of study.
Financing your child’s education through an education fund
With the facts highlighted above, you can expect to invest about half a million in your child before they can step into society and work. Although many people will think of saving this hefty sum , there is a better option. How about growing a pre-allocated amount yearly, put it in safe hands with a peace of mind and let professionals grow it for you? Here are some of the common concerns that people have and their solutions.
How much is necessary to provide for my child’s education regardless of their level?
You should prepare to fork out about S$50,000 to S$100,000 over the course of their education. Prices of university education are also likely to rise in Singapore.
What is the time-frame of saving and how much is needed?
The funds will be needed when your children are as old as 18 to 22 years. We recommend that you start saving as early as possible since we need time to accumulate the funds. This will also allow the funds to compound and achieve optimal returns. The amount you need will ultimately depend on whether your children will study locally or abroad.
Is it better to go for capital guaranteed plans or investment for my child’s education?
There is no right or wrong when it comes to choosing an instrument but it all depends with your risk appetite. We are, however, of the opinion that you should go for lower yields and capital guaranteed instruments as you want your funds to be available when your children need it most.
Is there any flexibility to allow the use of my savings in case of an emergency?
This ultimately depends on the instrument you choose and the one you prefer. Most traditional savings plans are rigid and can only be drawn out upon maturity date at a lump sum, or the last 3 years of the policy in batches.
Most savings plans today allows cash back to be withdrawn upon the 3rd year of the policy, and is mostly Guaranteed Insurability Option (GIO) – meaning no medical underwriting required.
What is the difference between having my own savings plan and using a professional platform?
A significant number of us don’t have the discipline it requires to save and we spend our savings very quickly. We forget that our children will lose the compounding of interest. We give you a systematic platform that will allow you to save from Day 1. You will rest assured that your children education fund will be there for you and your family in a few years.
What are some of the important tips for starters?
- Start early- Only by starting early will you be able to beat the rising cost of living.
- Be realistic- you need to be realistic and take into account other important factors such as allowance, clothes, transport etc.
- Working out the gaps- You will have to estimate the number of years and contribution it takes to reach your desired amount.
- Protection- An education fund for your child gives you assurances even during unforeseen circumstances.
- Instill good financial habits- Ensure that you put aside about 10% of your income to the education fund.
What you get with Education Savings plans
Now that you are aware of a great way to fund your children’s education, there’s only one question still remaining. Which is the most suitable plan among all the many plans and insurers in the market? Here is why we are the best.
- Low commitment- You will only be required to set a small portion of your monthly salary
- The Best (as well as safe and easiest) way out- Have you been taken aback by the money needed to raise your child in Singapore? Get an education savings plan that ensures high payouts that are guaranteed to educate your child in future.
- Grow your savings- Education plan allows you to support your child’s education way ahead of time.
- Peace of mind- With the plans recommended, you can be assured with a peace of mind. After all, no parent wants to deny their children the best education opportunity because they can’t afford it.
Get in touch with us today or fill the form below so that we can contact you, compare and filter different financial plans and even schedule an appointment. Remember, every second counts when you want the best education savings plan for your children.[contact-form-7 404 "Not Found"]