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A 2017 study by Zurich - Middle East estimates that educating a child could cost UAE parents close to Dh1 million, with a large chunk of it being dedicated to higher education. There's no denying that college education comes at a hefty price tag these days. On average, you'll need to shell out at least Dh100,000 per year on higher education in the UAE, with the costs mounting even further in other countries such as UK, Singapore and Australia.
Without proper financial planning, the spike in tuition fees during the transition from school to college can come as a rude shock to both parents and students alike. In a bid to pursue higher education despite the financial setbacks, most students plunge themselves into loans that may take years to pay off upon graduation. With inflation on a constant rise, education can cost upto twice the current price by the time a pre-schooler makes it into college. If you don't want to end up landing in a financial crisis or overburden your child with a loan later on, it's time you start saving right now. We have shortlisted some ways you can build a college education fund that will rescue you from falling short on finances in the future:
It's never too early
When should you start saving for your child's education? For many, the option opens up only when the child is into high school. The ideal time to start putting aside money for college starts right when your child starts schooling. Remember, when it comes to education, you can never start too early. In fact, the earlier you start, the better.
Draft a plan
Blindly setting aside a random sum every month is not what you'd call saving. You'll likely fall short. To avoid that, draw out a plan with the long-term goal in view. Chart out the probable expenses based on your child's interests while also factoring in the inflation rate. Divide the figure you get with the months you have leading up to it, and plan your savings accordingly.
Find more ways to save
An unexpected bonus or a cut in expenses would mean more money to save. Wherever possible, put by extra sums of money, perhaps more than your intended goal to ease the burden later. This will even allow you to minimise the fixed sum you set by periodically for a college fund.
Invest in a college fund
Investing in a proper college fund can provide you proper financial security preventing you from tapping into the fund in case of a sudden crisis. There are several investment options available to choose from, with monthly, quarterly or yearly payments. You can also explore equity funds, ETFs, bond funds, fixed income funds, and other funds.
Involve your child in the process
Take this opportunity to teach your child the value of savings and better money management. Encourage him/her to be a part of the process. Tell them what a college education is going to cost and encourage them to work hard and pursue a scholarship. You can even ask them to make small savings towards the fund by setting aside a sum from their allowance or taking up a part-time job. After all, the burden doesn't entirely have to fall on you.
In the end, planning for a child's college education is all about creating a long-term, practical strategy. It is about giving you the assurance you need that you've got the financed needed to shape your child's future. If in 15 years' time, you don't want to be looking back and wishing, "If only we had.", then set clear goals and invest in a proper college fund today.
The writer is the founder and CEO of Souqalmal.com. Views expressed are her own and do not reflect the newspaper's policy.
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