Children are the most previous gift we can receive in life; as parents we want to make sure they get the best chances and experiences in life. Living in Dubai, most people are aware of the cost of schooling their children; this can cost anywhere in the region of 30,000 – 50,000 AED p.a per child. However, with many expats, this can often be tied in with the employment contract and will not be an obligation to worry about.
However, have you thought about further education and the cost of going to University post eighteen? Would you like to see you children excel and obtain a degree? As a parent, this is something you will need to fund, or a student loan will need to be taken out to cover the university cost. In the UK, for the academic year 2012/13, tuition fees have gone up to 9,000 GBP p.a. This alone will cost 27,000 GBP if you stay at university for three years and a four year degree (a Master) will cost 36,000 GBP in tuition fees alone. As for accommodation, the average cost is 4,500 GBP p.a. and then there is food, entertainment and travel cost. This could easily cost between 60,000 -70,000 GBP for a three year course and a further 20,000- 25,000 GBP for a four year course. This is Money (www.thisismoney.co.uk) reported earlier this month ’Student debts to escalate as average cost of three years at university soars to MORE THAN £53,000’.
Universities in America fees are even more expensive and you can look to pay $50,000 p.a for sending your child to the top university. This will be a big burden to many people, especially the more off springs you have. Moreover, when young adult’s reaches further education age, numerous parents will be coming to the later stages in their career and will want to focus on retirement and not further expenses for their children’s education.
If you plan ahead and start saving early, you will be able to achieve the desired amount you need for further education, with little worry. For instance, if you start an Education Saving Plan when your child is born, for 18 years, you will only need to contribute 250 GBP p.m. ($400) to achieve 80,000 GBP ($128,000) in 18 years’ time (with assumed growth rate of 5% p.a.). However, if you leave your planning till your child is 13 years old, you will need to contribute over 1,250 GBP p.m. ($2,000), for 5 years to achieve a pot of 80,000 GBP. This is a considerable difference.
This is an expense that every parent will have to plan for, so make sure you contact a financial advisor to help plan well in advance and avoid being caught out.
(Written by Natalie Storey, Financial Consultant | ACUMA – Independent Financial Advice)