How Parents Can Put Money Aside for Their Kids’ Education

A question that often comes very late to most parents today – how can I save up for my child’s future education?

Knowing that your children are healthy, happy, and in good spirits can help parents feel at ease. When they are young, it is simple to make sure that they are all these things since you control every part of their lives, from the food they consume to the clothes they wear. But as your kids become older, they’ll start taking charge of their own decisions.

Without jeopardizing your peace of mind, provide your children the opportunity to choose their own paths in life. You can achieve this by making sure they have access to reputable institutions, a choice of the academic program, and desired university. You are giving the best life any child can ever have, by providing them the resources they need to become successful on their own someday.

Investing in your child’s education is a long-term goal. Making accurate future predictions and assessing the existing situation are essential components of financial planning. The same holds true when arranging for your child’s educational needs. The following are a few things you must consider as time goes by.

Stay updated with the estimated education cost for the next ten to twenty years and the current expense of schooling

According to the most recent statistics on the price of a college education in the Philippines, private colleges charge annual tuition of about Php 200,000. If we consider the K-12 curriculum and apply the current average annual increase for college tuition (CHED estimates it at 6.9%, which we can round off to 7%), kindergarteners today could be paying close to Php 482,000 a year (Php 1,928,000 for four years) for college tuition alone in 13 years. The amount you need to save up can be calculated starting from this estimate.

To stay updated, seek information only from reliable resources like DepEd. Find more information on their website regarding datasets on changes in tuition and other school fees.

Know the average price of schooling at the location of your choice

If your financial situation permits it, it doesn’t hurt to set a challenging objective. It goes without saying that obtaining a college degree abroad will cost more than obtaining a credential in the Philippines. But if you’re willing and able to contribute more to our endeavor, go ahead and do it. Giving your child that option is preferable to prematurely eliminating the option of studying abroad.

Investing in Your Child’s Education – How to Put Money Aside?

Streamline your way of life

Keeping your preferences simple is one of the easiest methods to prevent paying more than you would want. When purchasing a vehicle, for instance, choose a reliable and useful family SUV rather than a high-end sports car. Additionally, you can fit a week’s worth of food and your baby’s pram in the back while spending less money.

Allowing yourself to spend less allows you to save more. More importantly, even if your net worth grows, keep living simply. In this manner, you can comfortably set aside money for your children’s education while also saving for your retirement.

Invest

Putting the economy aside, today’s world presents a fantastic moment to start investing. Filipinos have access to user-friendly platforms, tools, and resources for investing. Additionally, you don’t have to start out as an expert in investing. There are reputable asset management companies in the Philippines that provide financial advice and manage your funds for you. Put your money in low-risk investments, to begin with, such as mutual funds, blue-chip stocks, etc.

Why even risk your money on investing, some of you may be wondering. Why not simply place your savings in a time deposit or savings account? (a usual Filipino thing) It’s because even if you maintain savings and time deposit accounts for the next ten years, you won’t make much money from them. Savings accounts pay less than 1% in interest annually, although time deposit accounts can pay up to about 3%. Any interest your savings or time deposit account produced would be eaten up by the high prices of goods and commodities given that inflation in the country can reach 5.2%.

Is investing therefore a better choice? Yes, especially if you keep your investments for at least ten years. In the past 15 years, the Philippine Stock Exchange Composite Index (PSEI) has grown on average between 10 and 15% each year. Yes, stock market investing can be dangerous, but historical data demonstrates that profits from the PSEI’s highs can offset losses from lows. In other words, investing for 10 or more years can yield substantially higher returns than simply keeping your money in a savings or time deposit account.

Start investing and saving up early

Your child’s educational finances will be larger the longer your time horizon for saving and investing. It’s never too early to begin planning for your child’s education; in fact, financial advisors advise doing so as soon as the child is born, as this technique takes advantage of compound interest.

For context, consider the following example: Even if the person who started later increases his investment for 20 straight years, the person who invested earlier will profit more than the person who started later. Always remember, time in the market beats timing the market. Despite having the benefit of time, investing “once, big-time” in a short-term, high-interest financial instrument will nonetheless result in lower long-term ROI.

A reliable asset management company in the Philippines can help you grow and protect your assets. At Cocolife Asset Management, we offer mutual funds that focus on:

• Medium- to long-term capital appreciation through substantial investment in blue chips and growth stocks listed on the PSE
  Generating long-term total returns from interest income and capital growth by investing in a diversified portfolio of US dollar-denominated fixed-income
  Generating regular and steady interest income, consistent with its policy to preserve capital and steadfastly maintain liquidity of its investments through a diversified portfolio of corporate bonds, government securities, and other fixed-income instruments

Benefits of Mutual Fund Investment for Your Child’s Education

• You can use your budget to cover unforeseen educational costs. Tuition is only one component of school costs. Although you would believe that things will become simpler once enrollment is complete, extra costs must still be paid throughout the year. Field trips, school supplies, and uniforms are all paid-for expenses. These are costs you must pay immediately, so having assets stashed away in investments guarantees that your family’s financial future is secure.
• It provides you with more time to concentrate on your kids’ academic progress. A prosperous future for your family requires more than simply savvy savings and investment decisions. To ensure kids benefit the most from their education, you must also put your time into it.
• No matter what happens, it guarantees a wonderful future for your children. While your current efforts are directed at providing them with the best education possible, the future is still up in the air. Over time, your family will benefit from investing in the future while building a future for themselves.

Invest in the next 10 years and see what benefits it can do to your child’s education!

You need a partner to save up for your child’s education. Doing it all alone can be time-consuming and draining. If you already have a lot on your plate, let Cocolife Asset Management manage your investments for you! For 19 years, we have been in the market helping Filipinos save up for their future. From emergency funds to building retirement and education plans, we help Pinoys every day make their lives better.

Your child’s future is in your hands – set them up for a greater career.