Parents want all the best things for their kids, and that sentiment rings true for education, as well. After all, a diploma from a respected institution can set your child up for a good life.
However, there’s that challenge of how expensive quality education costs nowadays. Not having a fund ready by the time your child goes to college can make parenting goals difficult to achieve.
As such, establishing a tuition fund for your child early on is crucial. Having a solid plan at the outset can help ensure you won’t have to drastically change your lifestyle to fund your child’s college education.
A Step-by-Step Guide to Building Your Child’s Tuition Fund
Taking the necessary steps in creating a tuition fund may entail a lot of sacrifice on your part, but these are acceptable costs if it means making your child’s dreams come true. You can follow these steps to help you save enough money to fund your child’s education.
Have a rough target in mind
Any financial goal, whether it concerns your child’s tuition fund or your retirement fund, should be approached with a target figure in mind. That means having an idea of how much money you need to save for your child’s college fund. Remember to factor in costs like food, transportation, and even dormitory fees.
Another thing to consider is the university of your and your child’s choice. Dreaming of sending your kid to one of the top schools in the country? Then you should anticipate it will cost more than a pretty penny to send them there.
Create a savings strategy
Arguably, this is the most important step in building a tuition fund. Identifying the source of the funds must be done early in the process. Most likely, the funds will mainly come from your work or business earnings, but you can also incorporate other means of income into your savings strategy.
One of the most common and effective ways of ensuring your child’s tuition fund gets enough cash is the 80-20 savings formula. Following this formula requires you to set aside 20% of your monthly earnings as your savings while you spend the remainder of your salary (50% on needs and 30% on wants).
You can also use other techniques to supply your tuition fund. Your 13th month pay, Christmas bonus, and commissions can also be used to fulfill your target figure.
Create a financial safety net
There aren’t too many certainties in life, but one of them is that there will be situations that will need you to raise extra money. Try to preserve your child’s tuition fund and prepare for the rainy days by creating a financial safety net.
This task will require discipline out of you. The best approach to building your safety net is creating a separate savings account and putting some of your earnings in it. Any disposable income you can spare should go to this safety net.
If you’re interested in building one for your family, get in touch with reputable banks like BPI AIA that have appropriate offers to help you achieve your goals for your safety net.
Increase your income
Another effective way to reach your goals for your tuition fund is by increasing your income. Since you have more money to spare, you can contribute more to your child’s tuition fund.
Here, the easiest methods of boosting your income include getting a promotion, asking your boss for a raise, doing freelance work, starting a business, or investing in stocks, bonds, and real estate.
Consider getting an educational plan
Educational plans are another popular approach for Filipino parents. Also called pre-need educational plans, this type of arrangement functions as a mutual fund where you’ll put contributions month after month for the money to grow interest.
Once the fund like BPI AIA’s Future Scholar matures, you’ll get a payout semi-annually that can support or finance your child’s education. It would be best to prepare early, as starting an educational fund later in your child’s life will mean higher monthly down payments for you.
Invest your money
Aside from educational plans, you can also consider putting your money in other income-generating methods. Stocks and bonds can be a good place to start, allowing you to exponentially grow your money while preparing your college fund.
However, there are also other avenues you can pursue. Investing in passive income streams like rental property can help ensure you’ll meet the demands of your child’s run through college. Mutual funds and variable unit life insurance policies are also worthwhile investments for your kid’s education.
Monitor your progress
As you take the necessary steps in building your child’s college fund, keep a close eye on your finances and watch out for any trends. Always be on top of your savings goals to have a clear account of your finances and keep you motivated.
Save Up for Your Child’s Future
There’s no greater gift you can provide for your child than quality education, and having a tuition fund ready by the time they go to college is a great way of achieving that. Your child will be immensely thankful that they can get into the college of their dreams with the money you’ve saved up.
Equally important is to make sure these funds are protected from unforeseen expenses. You can opt for an affordable insurance plan like BPI-AIA’s Life Ready Plus Savings plan. This financial product can be valuable in securing your family’s financial future.
For any questions about the Life Ready Plus Savings plan and other offerings, get in touch with our Bancassurance Sales Executive.