3 Ways To Save For Your Child’s Education02 Sep 2021
If you are a new parent or parent-to-be, there is one thing you should do right now in case you haven't already - start building your child’s education fund.
Your child’s education will take up a huge chunk of your expenses, and it is well-known that education doesn’t come cheap, especially if you opt for private or overseas education. Here is an in-depth look at public and private schools, as well as public and private institutions of higher learning.
If you are really serious about giving your child the very best, you will need to start preparing early, even before he or she is born. There are three options you can consider:
A fixed deposit can be a useful tool to grow your child’s education fund. It offers virtually no risk and generally gives you higher dividends compared to a regular savings account.
With a fixed deposit, you simply park a large sum of money into your account and leave it there to accumulate over the years.
National Education Savings Scheme (SSPN)
The SSPN is a savings scheme specially designed by the National Higher Education Fund Corporation (PTPTN) for the purpose of savings for higher education.
The scheme, which is Syariah compliant, offers various benefits, including tax relief of up to RM15,000, along with an annual dividend payout.
An endowment plan is a life insurance policy that also doubles as a savings plan. It allows you to save for your child’s education, or you can repurpose the plan as a retirement fund. You will receive a guaranteed lump sum once the policy matures.
An example is Gibraltar BSN’s Cash Star, which offers long-term coverage with a short-term commitment - you only need to pay your premiums for five years to enjoy 20 years of protection while saving for your financial goal.
Some people choose one or a combination of the above options. Regardless of what you decide, the most important thing is to start as soon as possible.
Education costs will continue to increase over the years, so the need for parents to carefully plan ahead becomes even more important. The earlier you start saving, the more time your money has to grow.
As your child grows up, it’s also important to teach and encourage him or her to save. When they understand the importance of their education fund, they will learn to appreciate the value of money and may even want to contribute to the fund as well!