Should I be saving for my child’s education now?

I have one child who is 3 years old. I was talking to a friend the other day, and she said that she has already started to save for her child’s education and he’s only 4! Should I be saving already?

Sheila Dickinson replies: Starting early is the key! You may think that 18 years is such a long way off. But time goes by very quickly and suddenly university is just around the corner and you have only got a short period to try to fund what is potentially one of the most expensive things you are ever going to have to provide for.

Apart from starting early, it is important to work out your own personal target amount. There isn’t any rule of thumb in determining the expense to aim for because it all comes down to what you want to provide for your child. You do this by looking at the fundamentals such as where you are now, how many children you have, how old they are, how long is it before you need the education fund, what ambitions you have for your children and what level of education you want to provide and where this will be provided.

Whatever you decide, don’t leave it too late. Don’t take a risk by doing nothing.

It is also important to remain flexible and review your education fund and its progress on a regular basis as there is a good chance you will need to update it. As your child grows older the goals you have as a parent may change because of the input they make on the type of course they want to pursue and which country they want to be educated in.

Having a framework, saving along the way and investing for the long-term can make a huge difference to your education fund. Thanks to the power of compound interest, regular savings over time do help significantly in wealth accumulation.

Lastly, although saving for a child’s education should be a huge priority, it is also important for you not to ignore your own financial well-being. You need to plan for the time when your child has flown the nest and for your retirement. Education should not therefore be viewed as a solitary area but in relation to your overall circumstances and lifestyle goals.

This article was contributed by Sheila Dickinson. Sheila is the Senior Vice President and a SFC Licensed Representative (SFC CE no: ANS128) with ipac financial planning HK Ltd. Sheila is a Technical Representative with the Professional Insurance Brokers Association, Registration Number PIBA-0428-007924.

ipac is licensed with the Securities and Futures Commission of Hong Kong, CE No. AAN641. Sheila can be contacted at financial.planning@ipac.com.hk. ipac is a member of Professional Insurance Brokers Association, member number 0428.
 
In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any person. Before making an investment decision, you should speak to a financial planner to consider whether this information is appropriate to your needs, objectives and circumstances.