Gulf News July 18, 2009
21 July 2009
Gulf News: Specific funds save better for children's education
I am a father of three and I have had to take a pay cut to keep my job. I am concerned that my kids’ education may suffer in the future if I don’t start saving now to put them through University. What should I do?
The gift of education is the greatest gift you can give! Saving for your child’s education is one of the most important investments you will ever make , something that your children will be grateful for throughout their life. In many cases today it is often the grandparents who decide, as a special gift, to invest in a policy that will secure the educational financial needs of their grandchildren. It is important that the sooner you start the more prepared you will be. If you have a five year- old then you have, for example, some twelve years to save for their University education, which often costs more than just the tuition fees. With ever growing numbers of parents in the region agreeing to pay for their children to study for degrees overseas, the cost of travel, accommodation and living expenses must also be taken into consideration. It’s also important to remember that the actual costs in 12 years time will be more than they are today, as a result of natural inflation. When you meet with an independent financial advisor you can discuss in detail the kind of tertiary education you envisage for your child, and receive the appropriate advice. If you aspire for them to attend Harvard Business School in the US, then the costs will be far higher than if the University of Dubai is your place of choice. It is important to remember that the University that one graduates from often provides that all important start to a career. Setting up a specific investment fund for your child’s education can give you better returns on your investment, when you come to use the funds in the policy, than you will receive with an average savings account. A fund also means that the money is physically and mentally separate from your every day finances, and so you are unlikely to dip into it when cash is in short supply. You can ensure that your child’s education be covered, even if anything untoward were to happen to you. During the term of the policy the funds would still be available to cover educational costs. Each of your children will need an individual fund – they are usually fixed-term policies that can span from any age, up to the age of 17, which is the usual age to start University level education. At the end of the term, the policy provides you with the flexibility to either directly fund the fees, or to take a lump sum, which you can use however you wish to support your child in reaching their career goals. A further point to consider is that most Universities require a “funding certificate” to accompany an application, which clearly demonstrates that the funds are readily available to support the student throughout their time at the institute. Most insurance companies will provide certificates to support applications. Please take the time to meet with an independent financial adviser and ensure that the future educational needs are secured for your children! By SS Raju, a senior manager at Nexus