GRACE Chuah started planningfor her children’s education13 years ago. At that time,her first child was only in Year One,but as an associate financial planner,she knew too well the price shewould have to pay if she did notplan ahead, so she started investingin properties.
“Education is expensive but important; we cannot afford to wait till the last minute to plan for it,” says the mother of two boys.
With the cost of living and tuition fees on the rise, parents need to look for ways to fund their children’s education.
Some start the planning the moment their children are born, others only begin to worry when their children complete secondary school.
Grace’s early planning has paid off. Her elder child is currently pursuing a psychology programme at the University of Queensland in Brisbane, Australia. Tuition fees and living expenses run up to almost RM100,000 per year.
Meanwhile, her second child, who is in Form Five, has dropped hints that he wants to study in the United States when he completes his pre-university programme.
To finance her first child’s education, Grace traded an old house for an office unit in a business district, which she then rented out. This was later sold off when a good offer came along.
For her younger son’s education needs, she decided to invest in unit trusts.
“If unit trusts are carefully monitored, the returns can be very attractive, maybe as much as three or four times higher than that of fixed deposits.
“Investing in properties and unit trusts are both ways to hedge funds for education. Which method you choose depends on your philosophy in life,” Grace says.
Architect Chan Seong Aun believes in savings as the safest way to set aside funds for his children’s education. Although there were study loans available, he did not encourage his daughter to apply for one when she wanted to do a twinning programme in business administration, which required her to spend the last year of her studies in Melbourne, Australia.
“I didn’t want her to start working life with a financial burden,” he says.
Chan bought insurance policies for his children’s education when they were born.
“I don’t think you can really plan for the full cost of your children’s education. But we need to set aside a sum of money for them,” he says.
Unlike some parents, Chan did not keep money in a bank account in Australia or play the currency market.
“I keep my financial plans flexible as we don’t know what our children may want to do. Things are different these days. Your child may even say, ‘I don’t want to go to university’. They have their own ideas,” he says.
Wong Kang Meng’s (not his real name) daughter is going to study architecture in Melbourne next year. However, the parent from Shah Alam admits he does not know where and how to get financial advice regarding his children’s education.
As it is, he plans to withdraw money from the Employees Provident Fund (EPF) account to finance his daughter’s expenses abroad.
Basket of eggs
It is important to plan early, says Success Concepts and Life Planners director and founder Joyce Chuah.
“These days, insurance alone is not enough to offset the rising cost of education and inflation,” she explains.
One of the keys to successful financial planning, according to Joyce, is to have a good “basket of eggs”.
“Besides insurance, consider other options such as buying foreign currency when rates are low, or investing in stocks.”
An education fund, she adds, should not be allowed to go to sleep.
“Don’t check on it only once in 20 years. You have to monitor it, just the way you check on your shares daily.
“Take advantage of changes in the market to give your funds a boost in the arm when the timing is right.
“If you plan early enough, there are at least two cycles that you can take advantage of, and recover from, if mistakes are made.”
Studylink Sdn Bhd managing director Tony Tan suggests that parents seek help when investing.
“Some parents don’t how what to do with the money they’ve set aside.
“They put them in fixed deposits, which doesn’t give attractive returns.
“Talk to bankers as they can provide you with options to suit your budget,” he says.
According to KDU College chief executive officer Dr Chia Chee Fen, some parents can be very innovative when it comes to raising funds for their children’s education.
“A banker quit her job and accompanied her daughter to study in New Zealand,” says Dr Chia.
“As she was good at baking, she started her own bakery to generate extra income to support the child. When her daughter finally completed her studies, she sold off the bakery and made a tidy profit.”
Parents who are well versed with financial matters may also choose to invest in properties overseas, especially in the country their children intend to study in.
“By doing this, parents cushion themselves against fluctuations in foreign exchange.
“The child will live in the property when he is studying.
“Upon completion of the course of study, the parents may even sell off the property and make a lump sum.”
“However, parents should also be aware that tuition fees may increase suddenly, and you should have enough money to meet the changes if you don’t want your children to be left in the lurch,” cautions Dr Chia.
Get your children involved
Taylor’s University College academic director (pre-university) and deputy academic director (tertiary) Thou Kok Cheng says parents should involve children in their financial planning.
“Some parents still have the ‘don’t let the children know, we can handle it’ mentality.
“Children should be told about their family’s financial resources.”
Thou adds that it is difficult for him to assist parents if they are reluctant to open up when they come to him for advice.
Most universities do offer some form of bursary or fee waiver which students can take advantage of.
Furthermore, he adds, the burden of financial security should not totally lay on the parents alone; students can help to sustain themselves by working part time, too.
“In Australia, students are allowed to work a maximum of 20 hours a week with an average wage of about A$15 (RM41) an hour,” says Tan.
“During summer holidays, they can work full time, so if they put in 40 hours a week, they stand to earn about A$2,400 (RM6,520) a month,” he adds.
Dr Chia readily agrees.
“Students should not depend solely on their parents for money.
“For instance, if a student is fluent in Chinese, she can actually do some part-time work like teaching or giving lessons to young children.”
HELP University College Career sense @ HELP director Gerard Joseph Louis says parents should also remind their children not to get involved in addictive past times such as online shopping, gambling, smoking, and drinking as these habits can rapidly deplete funds.
“I’ve heard pitiful cases of students having to return home without completing their studies because they had finished the money allocated for them,” he says.
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