Every parents wants the best for their children.
Not only we want them to be provided all their necessities but wanted it to be "extra" special. We wanted to provide them things we did not have when we were at their age.
Food, clothing, and shelter - basic necessities that we as parents need to provide for our little ones. But as they grow, their needs also grows.
One of the growing needs of our children is EDUCATION.
I was about 5 years of age when I started school at a day-care center, 6 years old when I enrolled to Kindergarten and 7 years old when I started Elementary.
Today, children can go to school as early as 2 years old!
Now, going back to how much we love our children, we want them to send to the BEST school there is. Or at the very least, we want to make sure their education needs are taken care of.
Unfortunately not all parents are aware that education planning is one of the most important thing in their family life and is often unplanned.
Reality #1: Tuition fee increases every single year
That's a given fact - tuition fee increases at a rate of 8-12% per year. Given this rate, you can actually predict the cost of education and be prepared for it.
Reality #2: Job security is a myth
I've experienced this personally twice already in my less than 10-year career. One company made our roles redundant and one company closed. Are you sure that the company you are working for will still be present when your child needs money for school? Or are you sure that you are still hire-able when the time comes?
Reality #3: Life is unpredictable
SAD happens. We can not always avoid being sick, but sometimes accident happens that may lead to an unexpected death. Most often when things like these occured in one's life, there's a high chance that the fund you are saving up for your child's education might be spent. And when any of these happens, it's really SAD.
So, how do we prepare for our child education needs?
So, as parents, how do we prepare for our child future education needs?
Step #1 Get the current rate of tuition fees
According to Smart Parenting, here are the tuition fees for Metro Manila's private schools.
Pre-school: Ps 40,000 per year
Elementary: Ps 80,000 per year
High school: Ps 150,000 per year
College: Ps 110,000 per year
Note: For my child's college annual tuition fee, I used a rate of Ps 200,000 per year.
Step #2 Compute the future value of these rates
Based on the rates above, you can compute for its future values. Note that schools' annual increase ranges from as low as 4% per year to as high as 12.5%. Choosing a higher rate will give you more confidence as it adds buffer to the fund that you need to accumulate.
Taking my daughter as an example, it gives the following values.
Pre-school: Ps 193,000 total
Elementary: Ps 1.3 Million total
High school: Ps 5 Million total
College: Ps 7 Million total
Note: I offer a 1 on 1 session that teaches how to compute these values. Contact me via the form below.
Step #3 Prepare
When you need money for a future need, you save for it. When saving for it might not beat the deadline, you put it on an investment vehicle.
If you want to only prepare for college, you have roughly 17 years to prepare for it.
If you also include funds for High school, then that should be roughly 10 years.
Remember that TIME is your friend. Best time to invest is YESTERDAY, the next best is NOW!
Financial planning is a must have for every one. While it is very important for starting families, one can actually start building wealth soon as he/she got his/her first job.
And while we delay our action for taking the next step to resolve our financial woes, that decision has a long-lasting impact on our future's quality of life.
Let me help you build your plan.