Want to start saving for your Children’s education? Read this Before to Maximize your savings

By Sakshi Srivastav - 20 Aug 2021 Last Updated: 19 Sep 2021
Want to start saving for your Children’s education? Read this Before to Maximize your savings

The importance of education in a child's life cannot be overstated. As parents, we endeavour to provide our children with the greatest education possible, from early childhood to higher education. However, in a world where cost determines quality, financial planning for education-related costs is critical. Parents in the UAE, according to reports, spend more on their children's education than the global average. This includes tuition, books, transportation, and other expenses, but excludes high-end schools. As a result, parents in the UAE must have a strategic plan in place to ensure that their children's education is funded.

So, where do you start? Just pick a ballpark figure and start saving? What is the best time to begin? What factors should be taken into account when investing for a child's higher education? Is it enough to save money or should one also invest? Today, we'll provide a guide to assist you in planning your saves and investments in order to build a corpus for your child's education. So without any further ado, let’s learn!

Tips to implement in UAE-

Tips to implement in UAE

Maintain a habit of saving regularly

Once you've decided on a figure, you'll need to start saving money in order to meet your deadline. So, if your child is two years old and should go to university when he or she is 18, you have 16 years to save for his or her education. However, because it is a long-term strategy, many people tend to falter and waste time. As a result, rather than counting the years, we recommend that you plan your savings depending on the amount of salary you will earn throughout that time.

For example, you are paid 12 times a year (unless you are having multiple sources of income). As a result, you will have 192 wages in 16 years. As a result, every sum you want to save must be broken into 192 parts, making your savings strategy more concentrated and efficient. If you want to spend AED 1,000,000 on education. After that, breaking it into 192 sections will cost around AED 5200. As a result, make sure you have set aside AED 5200 per month for education savings.

Do not forget to consider inflation

You can't disregard inflation when investing for the future. In layman's terms, inflation is the rate at which the purchasing power of money depreciates over time. So, if you can buy a product or service for AED 100 now, how much of the same product or service would you be able to buy for the same amount in 2030?

Every country has an inflation rate that can be used to estimate the post-inflation cost of schooling. If you're saving for college in a different country, you'll need to factor in that country's inflation rate. If the rate of inflation is roughly 5%, the expense of education will have more than doubled in 15-16 years. As a result, it's critical to factor in inflation while budgeting for future expenses such as your child's schooling in UAE.

Create a well sounded Budget

Budgeting is one of the most crucial skills in the toolbox of anyone who wants to put money aside for the future. We all have a restricted budget and must control our costs while still conserving money. We have objectives and dreams that necessitate financial planning. Here's where having a budget comes in helpful. It enables you to efficiently approach the massive future costs by preparing and saving for them over time in UAE. You may minimise unnecessary expenses and guarantee that you save enough money to be financially prepared for future scheduled and unanticipated expenses if you have a healthy budget.

Calculate the cost

Consider where your child is likely to study as one of the most crucial measures in preparing for his or her education fees. We accept that this will not be ideal because predicting the future is hard, but you can't prepare for the costs until you know what they will be, right?

The most crucial thing is to figure out how long you'll need to go to college or further education. It's best to get started as soon as possible. The greatest moment to start saving for schooling is when the children are born, because parents do not have to pay for school fees or other extracurricular activities for the first 4-5 years. They may instead invest on education in UAE. While you have control over your child's education, further education will be determined by the types of interests he or she develops. You must devise a method for evaluating the various possibilities that your child may pick and preparing for the most expensive one.

Examine options both within the UAE and in other nations. Today's children do not appreciate being constrained by the borders of their home nation and are eager to travel the globe from an early age. It's also crucial to understand where the prospects intend to send their children for education, as the fee structures in the United States, the United Kingdom, Europe, and Asia are all different. This provides you with a starting point. While there are more things to consider, this is the starting point for your calculations.

Be prepared for the unexpected

Always budget for additional expenses such as lodging, pocket money, and tuition fees, among others. Aside from school and tuition fees, your child may face a slew of other costs as he or she reaches high school in UAE. These additional costs may appear insignificant on their own, but when added together, they add up to a significant sum. This is especially true if you want your child to pursue graduate or post-graduate studies in another country. This is because, after your child is admitted, you will very certainly discover that there are a number of other charges that have been overlooked.

Invest with caution

Saving money alone is rarely enough to plan for large expenses such as your child's school; you must also invest. There are numerous investing options accessible today, with returns ranging from 4 to 15% on investments and various risk exposure. Equity, debt, commodities, gold, real estate, and so on are examples of them. Each of these tools has its own set of advantages and disadvantages. As a result, it's critical to examine them thoroughly and select ones that fit your investor profile and financial objectives in UAE.

While stock investments, for example, tend to yield bigger profits, they also carry a higher level of risk. Debt investments, on the other hand, have reduced risks but do not provide attractive returns. Most investors benefit from a well-balanced approach. If you're new to investing, we recommend consulting with a financial professional to get started. Keep in mind that you work hard to acquire money and even harder to save it. As a result, invest wisely and avoid taking needless risks.

Ensure that you are adequately insured

Have you considered what would happen to your desire of providing the greatest possible school for your child if you die prematurely or are involved in an accident that limits your physical ability to work in UAE?

The death of the family's breadwinner and the lack of insurance are two of the most serious possible impediments to a child's education. Make sure you have enough life and health insurance to cover the cost of your child's tuition at whatever school or college he or she may attend. There are, after all, ways to meet your family's objectives even if you are not present.

Safeguard your child’s future

It is advisable to secure your child's future when planning for it, even if you are unable to continue saving and investing due to a catastrophic sickness or death. Life is unpredictably unpredictable, and you don't want your child's education to be jeopardized in any way in UAE. As a result, in addition to working toward your financial goals, make sure you obtain protection plans to ensure that your financial goals are accomplished in the event of an unforeseen incident.

Conclusion

The best gift you can offer your child is education. When he reaches the real world, it will be his armour and tool, assisting him in gaining a better perspective on life. With school growing more expensive, it is becoming increasingly crucial to begin early and work toward ensuring that you are well equipped to manage higher education expenditures without taking out loans or, worse, forcing your child to make concessions. The suggestions in this article can assist you in developing a strategic strategy for funding your child's future education. Remember, the sooner you begin, the easier it will be to achieve your financial goals without sacrificing too much of your lifestyle. Thus we hope this blog provided you with incite full information. For more information on other related aspects, feel free to checkout our Website as well.

 

Investments Related FAQ

Frequently Asked Questions

  • Why should one Invest?

    Earning money now is insufficient, since it may not be enough to meet life's financial objectives. As a result, it is critical to spend money. Saving money in the bank is the same as giving up an opportunity to make money. It is crucial to invest carefully in the different plans available on the market, choosing the one that is ideally tailored to your objectives.

  • What is the eligibility to buy Investment Plans?

    With new technologies and goods, the investment market is rising by the day. The conditions for investing in different forms of investment instruments differ depending on the providers in the UAE.

  • What are the best Investment for Expats in UAE?

    Expats can invest in stocks, bonds, real estate, cash, UAE mutual funds, or other forms of funds in the UAE.

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