Singapore boasts of exceptional schools that offer a world-class quality of education. There are international schools with an impressive curriculum to prepare students for a highly competitive world in various fields whether in science, the arts, maths, engineering, and technology. This is why parents dream of sending their children to such schools that are noted for imparting the highest level of instruction to learners, which harness their ultimate potentials. But it is also not a surprise that considering the high standards of education in Singapore, the cost of enrolling children in such schools can be astronomical as well. The massive price tag that comes with schooling your child in such a highly progressive country may be enough to give any parent some anxieties about saving for their little one’s education.
This is why if your son or daughter will be attending college soon, it makes perfect sense to prepare for this years before the target date. Tertiary education in Singapore can be very expensive, so you will need to do your best to start saving up for college or university tuition and fees before it is too late. But in times to come if you ever need an alternative approach, you can always approach licensed money lender in Singapore as they offer personal loan, and payday loan.
But the big question is, how can you actually prepare for your child’s college education?
First, let us take a look at how much it actually costs to enroll students in a university in Singapore. Based on an article published on CNBC, the fees charged by Singapore universities have gone up by 38 percent since 2007. There are 5 major universities in the country including the National University of Singapore, Singapore Management University, Yale-NUS, Singapore University of Technology, and Nanyang Technological University. These are the big names when it comes to superior quality of education in the city, which also means the tuition fees are much higher than in other schools.
According to the Household Expenditure Survey conducted by the government, Singaporeans spend massive amounts of money on higher education. In fact, it went up to $1 billion in 2014, which was alloted on college tuition. In 2004, it was only at $650 million. This only proves to show that the cost of sending a child to a university or college is a HUGE amount to save up for years before the time comes.
There are several reasons behind the increasing expenses such as the increasing operating costs and enhancement in terms of technological pieces of equipment installed in the school. So, if you have a child who will be attending college soon, it is best to grow your tertiary education funds years before the time comes.
The following are some techniques you may want to apply when it comes to saving up for your child’s college education:
1. Determine the amount you need for your child’s education
It is best to think about the potential cost of college tuition fee several years from now instead of basing the amount to its present value. If you are thinking of saving for your child’s college education, then you will have to take into account the inflation rate and lifestyle expenses and miscellaneous costs involved with sending a child to a university in Singapore. For instance, you may want to send your child to NUS and take up degree in Arts. Then, you will want to calculate the amount with an additional of 2 percent increase per year. This means that if your child is only 1 year of age, setting aside about $44,000 should be enough by the time he reaches 18. This is a reasonable amount considering the current fees for a typical 4-year degree is at $31,000.
What we did here was calculate the potential increase in rates 18 years from now. Of course, the cost of living would have increased significantly by then, along with other expenses that come with it. Thus, if you decide to save $50,000 in 18 years, then it would mean having to put in at least $231.50 monthly for his college education fund. If you think about it, the amount is not anymore that much, which makes it doable to accomplish according to your desired timeline.
2. Learn more about the different options to save money for your child’s future
After determining the projected cost involved in sending your child to school, it is time to begin saving for money before the actual time comes for college to start. Here are the different routes you may take to save for the tertiary education of your child.
a. Savings Account
If you are aiming for the easiest route to save for the projected amount for your child’s college, then a savings account may be one option. This is, however, not exactly the smartest and most efficient option, yet there are no difficulties involved when it comes to getting started. All you need to do is to deposit the $200 into a bank account (a separate one) per month, and it should be able to grow to as much as $50,000 by the time he reaches 18 years of age. In case you have the lump sum cash right away, it also makes sense to put this in at the moment you open an account, so it could start earning a high interest rate every month.
b. Singapore Savings Bonds
Another solid option to consider when saving for your child’s education is the Singapore Savings Bond or SSB. This will allow you to save in a risk-free manner while receiving as much as 2.12 percent interest rate that is guaranteed annually. So, this can even help you when you want to cover inflation costs. If you put in the $20,000, you can get over $4,300 interest rate in 10 years. This means to say that starting at a lumpsum cash should even be better because of the higher interest this could earn in a decade.
But practically speaking, there are some people who may not be able to put in a lump sum amount. If you want, a lower amount is still doable, and you can expect it to pay a good interest rate unlike what you can expect from your regular savings account. But then again, early redemption does not give you a higher interest. So, be sure to just hold on to the amount and not withdraw it until the time comes that you need to take it out to pay for your child’s schooling.
c. Endowment Plan
If your goal is for savings, then an endowment plan is another choice to consider. But just like most savings account, the returns are smaller than what you can expect from investment plans. Yet, if you want to receive a guaranteed amount once the policy ends, then you can have exactly what you need. The lump sum amount is exactly in your hands at the end of the term. It is worth noting, though, that with an endowment plan, there is a chance for you to lose your money in case you decide to terminate it before the maturity period. This makes it highly important for you to check first your capability to contribute to the premiums at a regular basis. If not, then it will be more of a loss than a gain for you. You will have to decide on the endowment plan that works best for your child’s age. Unfortunately, if you have a 5-year old child, then the plan is not a practical choice anymore since there is a fixed term required such as a 20- or 15-year term. But the earliest time you can take the money out would be once your child is 20 years of age, which is what a 15-year term translates to.
There are also 2 different types of this type of savings, which are the split and lump sum payout. If you opt for the split payout, then this would mean the cash you can take out is distributed based on the policy term. An example would be $4,000 per year from the 10th year onwards. Also, be sure to take caution when you check on the plan’s projected returns. This is merely a projection or estimate instead of a guaranteed amount. You should look at the guaranteed returns and check on the actual amount you can earn at the end of the term.
Hence, you should start planning right for yourself and for your kids in future. As we all know, education is very important in Singapore. Make sure to start things right!