COVID taught me two important lessons about education planning for my children:<\/p>\n\n\n\n
First\u2014planning is a must. Whether I want to be the parent of a neurosurgeon, or I want my child to be happy and pursue his\/her dream, my children need a decent education, and I need funds for that.<\/p>\n\n\n\n
The 2% average education inflation rate (DBS, 2022; TRADING ECONOMICS, 2022<\/strong>) shows me the importance of education planning to ensure funding.<\/p>\n\n\n\n Second\u2014anything can happen, especially with children. My neighbor\u2019s good performing son recently experienced a drop in grades and needed tuition. My friend\u2019s daughter suddenly has skin allergy and needed medical care while the another required braces for her teeth. I tell myself, I must always be ready for such situations. <\/p>\n\n\n\n To survive as a mother of two, I have to believe that education planning runs together with my household expenses.<\/p>\n\n\n\n I learned that putting some cash aside did not help. Buying an education insurance plan was not enough too. I was forced to accept that education planning is no longer that<\/em> simple.<\/p>\n\n\n\n Think about it: with jobs shifting to cope with the unbelievable fast pace and advancement in technology, every child in Singapore now faces more<\/em> education choices: local or overseas university; degree, masters or PhD; double major, major\/minor, or double degree.<\/p>\n\n\n\n This then involves a complex process to pick the best education path\u2014our children need to understand their strengths, know the available education choices, and then weigh the pros and cons.<\/p>\n\n\n\n There is a wide spectrum of education insurance and savings plans out there, and with enough aggressive tactics, it is easy to just dive in and be lost in the flow of things.<\/p>\n\n\n\n At the end, you will realize that you could\u2019ve gotten more. But, as always, it will be too late to do anything.<\/p>\n\n\n\n So my advice is to take note of the following 3 risky traps before making a commitment:<\/p>\n\n\n\n By default, I mean the \u2018fixed\u2019 maturity terms of some endowment savings plans.<\/p>\n\n\n\n For example, \u2018after 15 or 20 years\u2019 or \u2018when your child completes his\/her Tertiary education\u2019, presumably at \u2018the age of 25 \u2018. Using the default means that if your child graduates before<\/em> the payout date, you will be left unprepared.<\/p>\n\n\n\n With that said, consider the maturity payout date to be at the start<\/em> of your child\u2019s tertiary education. For example, age 19 or 20 for girls, depending on their post-secondary education route, and age 21 for boys, considering their period of National Service.<\/p>\n\n\n\n Of course, a date customised to your child\u2019s learning path is the most reassuring. For this, have \u2018the talk\u2019 with your child to get a better sense of his\/her plan or dream, then get in touch with his\/her existing school\u2019s Career Guidance Counsellor for a clearer idea of the best possible education pathway and the number of years required until tertiary education.<\/p>\n\n\n\n Lastly, identify a plan that lets you determine the commitment period. (Alternatively, you can consult a financial advisor who specializes in education planning to help you with this step.)<\/p>\n\n\n\n Table 1: Minimum Number of Years for Bachelor\u2019s Degree Programme in Singapore<\/strong> It\u2019s more convenient to make general assumptions, especially when you\u2019re so busy with your job and family \u2014I understand.<\/p>\n\n\n\n But, practice prudence is still the key in financial planning, especially when you\u2019re acting alone, without a financial advisor. Not all insurance policies and savings plans are the same, so know what you\u2019re getting into before you purchase the plans.<\/p>\n\n\n\n For instance, some insurance plans do afford a degree of flexibility that will help you cope with unforeseen circumstances (see point 3<\/strong>).<\/p>\n\n\n\n Then, there are plans that bear two elements: death benefits and a cash value that is accessible after a certain period, and those that acquire a surrender value over time. But be careful that such cash access may not work like the payout of a savings plan.<\/p>\n\n\n\n If you plan to take on a life insurance policy as a savings plan, do take note of the difference between the two types of plans so as to get as much benefits from the plan you choose to purchase. A financial advisor would be able to help you with the details, should you need more advice and guidance.<\/p>\n\n\n\n Be flexible. We have no choice. With so many education pathways, we can\u2019t predict which route our children will take. Plus, you know that expenses can have their highs and lows, so we can\u2019t afford to stick to the plan<\/em>.<\/p>\n\n\n\n I\u2019ll show you why. Let\u2019s say, you have the following mapped out:<\/p>\n\n\n\n (i) Determined the estimated number of years of tertiary education for each child. (Refer to Table 1 above)<\/strong><\/p>\n\n\n\n (ii) Worked out the total cost<\/u> to complete a tertiary education (based on Table 2), noting that the average annual inflation rate here is about 3% per annum.<\/strong><\/p>\n\n\n\n Table 2: Estimated Annual Tuition Fees for Main Courses Across the Universities <\/strong>(Note: Fees for SIT and SUSS are averaged over min. course duration as the school provided the fee for the full course.*Refer to Table 1) (Sources: Official websites of each stated university)<\/em><\/p>\n\n\n\n (iii) Calculated the other expenses (including living expenses) of your child to complete the tertiary education.<\/strong><\/p>\n\n\n\n Table 3: Estimated Annual Amount of Other Expenses for Tertiary Education Student<\/strong> So now, you have a ballpark figure in mind, let\u2019s say it\u2019s S$15,110.<\/p>\n\n\n\n And then, you work out your monthly savings amount to about $105 since your child has just started Primary 2. (With this amount, in 12 years time, at your child\u2019s first year of university, you\u2019ll have enough and be able to get the payout for the expenses.)<\/p>\n\n\n\n Sounds good so far, right?<\/p>\n\n\n\n Then, some time after starting the savings scheme, you realise that your child\u2026 <\/p>\n\n\n\n Table 4: Estimated Costs of Enrichment Classes. The rates include classes held in CC (a group setting) or with a private instructor (one-to-one coaching) and does not include class materials.<\/strong> (Source: British Council, 2022; BYKidO, 2022; Dance Arts Singapore, 2019; French Toast Language Centre, 2022; Lessons Go Where, 2022; Maths Hub, 2022; MONEY SMART, 2022; Mediaone, 2020; Singapore Piano Lessons, 2022; Singapore Sports Hub, 2022; OnePA, 2022; Sassy Group Media Limited, 2021; SAFRA, 2022; The Learning Lab, 2022<\/em>) What would you do?<\/p>\n\n\n\n Deep down, you want to pay for all these expenses. These skills are \u2018good-to-have\u2019, though not compulsory, but they are good<\/em> for your child to have<\/em>. If he\/she could do better in the future with these skills, why not?<\/p>\n\n\n\n But where do you get the additional funds? Do you reduce our family\u2019s food expenses?<\/p>\n\n\n\n What if you have more than one child? Do you sacrifice one\u2019s expenses for the other?<\/p>\n\n\n\n Or perhaps give up any good options that are pricy?<\/p>\n\n\n\n I remembered it so well: the pain I felt when I realized that I want to provide for my children, but I can\u2019t.<\/p>\n\n\n\n So I learned: the way to afford the best for my kids while living with healthy stress levels is to use a flexible savings plan\u2014one that allows an earlier or a later withdrawal, so I can have better options.<\/p>\n\n\n\n Flexibility Allows More: It\u2019s Not Just About Them\u2014It\u2019s About You Too!<\/strong><\/p>\n\n\n\n With the COVID-inducing new norms, two incomes no longer seem enough\u2014and I\u2019m not the only parent who felt this. Financial needs can jump at us from many places; the ones from our children will make us give up that luxurious high tea or that new car, or even our retirement plans.<\/p>\n\n\n\n Don\u2019t tell us to hold back; it\u2019s tough. Yes, it\u2019s their future; they should work for it. But whatever dreams they have, our children need at least a decent education, and the path to a bright future shouldn\u2019t be limited by costs.<\/p>\n\n\n\n If we, their parents, don\u2019t support them, who will?<\/p>\n\n\n\n Still, I don\u2019t think sacrificing our retirement plans is the way.<\/p>\n\n\n\n A Split Savings Programme<\/strong><\/p>\n\n\n\n Consider this: I portion\u2014which is essentially, \u2018split\u2019\u2014my savings for two uses. Now, I can save for my children\u2019s education AND my retirement at the same time!<\/p>\n\n\n\n Also, since I\u2019m making only one commitment for two purposes, there\u2019s greater convenience, and I like it!<\/p>\n\n\n\n But then I realized I have to save more per month, which increases my financial strain, and I didn\u2019t want that.<\/p>\n\n\n\n So I chose a programme that also allows me to \u2018make my money work for me\u2019\u2014I invest my monthly savings and let them multiply behind the scenes. That way, I can keep my monthly savings amount at a comfortable level and still be able to afford a substantial amount for both education planning and retirement. <\/p>\n\n\n\n I\u2019m kiasu<\/em>; I believe that \u2018the early bird catches two<\/em> worms\u2019\u2014the sooner we start planning, the better chances we get at having the best of both worlds: a financially independent future and our children\u2019s success.<\/p>\n\n\n\n When is \u2018sooner\u2019?<\/p>\n\n\n\n Why not now? Contact me\u2014your one-stop for advice on education and financial planning\u2014and we\u2019ll start right away!<\/p>\n\n\n\n IDM-MM\/PC\/220623 Written by Pamela Chong<\/strong> (Associate Manager<\/strong> from TN Advisory Group<\/a>)<\/strong><\/p>\n\n\n\n1. Don\u2019t Use A Default Mature Payout Date<\/strong><\/h4>\n\n\n\n
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\n \n University<\/th>\n Course<\/th>\n Duration (Years)<\/th>\n <\/tr>\n <\/thead>\n \n Nanyang Technological University (NTU)<\/td>\n Accountancy<\/td>\n 3<\/td>\n <\/tr>\n \n Business<\/td>\n 3<\/td>\n <\/tr>\n \n Communication Studies<\/td>\n 4<\/td>\n <\/tr>\n \n Education<\/td>\n 4<\/td>\n <\/tr>\n \n Engineering \/ Sciences<\/td>\n 4<\/td>\n <\/tr>\n\n \n National University of Singapore (NUS)<\/td>\n Dentistry<\/td>\n 4<\/td>\n <\/tr>\n \n Law<\/td>\n 4<\/td>\n <\/tr>\n \n Medicine<\/td>\n 5<\/td>\n <\/tr>\n \n Music<\/td>\n 4<\/td>\n <\/tr>\n\n \n Singapore Institute of Technology (SIT)<\/td>\n Computer Science<\/td>\n 4<\/td>\n <\/tr>\n \n Food Business<\/td>\n 2<\/td>\n <\/tr>\n \n Engineering<\/td>\n 3<\/td>\n <\/tr>\n\n \n Singapore Management University (SMU)<\/td>\n Accountancy, Business, Law<\/td>\n 4<\/td>\n <\/tr>\n\n \n Singapore University of Social Sciences (SUSS)<\/td>\n Linguistics & Languages, Humanities & Social Sciences, Social Services<\/td>\n 4 \u2013 4.5<\/td>\n <\/tr>\n\n \n Singapore University of Technology and Design (SUTD)<\/td>\n Architecture (ASD), Product Dev. (EPD), Engrg Systems & Design (ESD)<\/td>\n 4.5<\/td>\n <\/tr>\n <\/tbody>\n<\/table>\n\n\n\n
(Sources: Official websites of each stated university)<\/em><\/p>\n\n\n\n2. Don\u2019t Treat All Plans The Same<\/strong><\/h4>\n\n\n\n
3. Don\u2019t Fall In Love With Your Plan<\/strong><\/h4>\n\n\n\n
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\n Course<\/th>\n Annual Tuition Fee as of 27 April 2022 (est in SGD)<\/th>\n <\/tr>\n \n \n NTU<\/th>\n NUS<\/th>\n SIT<\/th>\n SMU<\/th>\n SUSS<\/th>\n SUTD<\/th>\n <\/tr>\n <\/thead>\n \n Accountancy \/ Business<\/td>\n 9,450<\/td>\n 9,650<\/td>\n 9,300<\/td>\n 11,500<\/td>\n 8,410<\/td>\n \u2013<\/td>\n <\/tr>\n \n Arts and Social Science<\/td>\n 8,250<\/td>\n \u2013<\/td>\n \u2013<\/td>\n 11,500<\/td>\n \u2013<\/td>\n \u2013<\/td>\n <\/tr>\n \n Architecture \/ (ASD)*<\/td>\n \u2013<\/td>\n 8,900<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n 13,500<\/td>\n <\/tr>\n \n Communication Studies<\/td>\n 8,250<\/td>\n \u2013<\/td>\n 7,500<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n <\/tr>\n \n Computer Science<\/td>\n 9,450<\/td>\n 8,250<\/td>\n 7,785 \u2013 10,830<\/td>\n 11,500<\/td>\n \u2013<\/td>\n \u2013<\/td>\n <\/tr>\n \n Dentistry<\/td>\n \u2013<\/td>\n 30,200<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n <\/tr>\n \n Education<\/td>\n 8,250<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n 7,500<\/td>\n \u2013<\/td>\n <\/tr>\n \n Engineering<\/td>\n 8,250<\/td>\n 8,250<\/td>\n 7,500 \u2013 10,380<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n <\/tr>\n \n (EPD)*, (ESD)*<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n 13,500<\/td>\n <\/tr>\n \n Food Business<\/td>\n \u2013<\/td>\n \u2013<\/td>\n 7,500 \u2013 20,760<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n <\/tr>\n \n Humanities, Social Sci.<\/td>\n 8,250<\/td>\n 8,250<\/td>\n 9,300<\/td>\n 11,500<\/td>\n 7,500<\/td>\n \u2013<\/td>\n <\/tr>\n \n Law<\/td>\n \u2013<\/td>\n 12,700<\/td>\n \u2013<\/td>\n 12,700<\/td>\n \u2013<\/td>\n \u2013<\/td>\n <\/tr>\n \n Linguistics & Languages<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n 7,500<\/td>\n \u2013<\/td>\n <\/tr>\n \n Medicine<\/td>\n 35,000<\/td>\n 30,200<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n <\/tr>\n \n Music<\/td>\n \u2013<\/td>\n 14,700<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n <\/tr>\n \n Science<\/td>\n 8,250<\/td>\n 9,100<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n \u2013<\/td>\n <\/tr>\n <\/tbody>\n<\/table>\n\n\n\n \n \n
\n \n Description<\/th>\n Annual Amount (Est. SGD)<\/th>\n <\/tr>\n <\/thead>\n \n On-Campus Accommodation<\/td>\n 2,800 \u2013 7,260<\/td>\n <\/tr>\n \n Compulsory Miscellaneous Fee<\/td>\n 150 \u2013 450<\/td>\n <\/tr>\n \n Average cost of books \/ supplies<\/td>\n 400 \u2013 500<\/td>\n <\/tr>\n \n \n Average Transportation
\n (3 trips of public transport per day)<\/small>\n <\/td>\n 800 \u2013 900<\/td>\n <\/tr>\n \n Mobile phone and Internet<\/td>\n 360 \u2013 600<\/td>\n <\/tr>\n \n Personal Expenses<\/td>\n 1,200 \u2013 2,400<\/td>\n <\/tr>\n \n Total Estimated Expenses per annum<\/td>\n 5,710 \u2013 12,110<\/td>\n <\/tr>\n <\/tbody>\n<\/table>\n\n\n\n
(Sources: Official websites of each stated university)<\/em><\/p>\n\n\n\n\n
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\n \n Description<\/th>\n Estimated Cost
(SGD)<\/th>\n <\/tr>\n <\/thead>\n \n Art & Craft<\/td>\n 28 \u2013 150 per class<\/td>\n <\/tr>\n \n Brain Training Class<\/td>\n 1, 500 per session<\/td>\n <\/tr>\n \n Dance (i.e. Ballet, Gymnastics)<\/td>\n 112 \u2013 430 per month<\/td>\n <\/tr>\n \n Language (i.e. English, Chinese) Class<\/td>\n 30 \u2013 240 per class<\/td>\n <\/tr>\n \n Taekwondo<\/td>\n 60 \u2013 400 per month<\/td>\n <\/tr>\n \n Tuition<\/td>\n 30 \u2013 100 per hour<\/td>\n <\/tr>\n \n Music (i.e. Piano) Class<\/td>\n 20 \u2013 400 per class<\/td>\n <\/tr>\n \n Science & Math<\/td>\n 55 \u2013 119 per session<\/td>\n <\/tr>\n \n Sports<\/td>\n 20 \u2013 450 per training<\/td>\n <\/tr>\n <\/tbody>\n<\/table>\n\n\n\n
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IDM-MM\/PC\/220961<\/p>\n\n\n\n
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