How Much do I Need for my Children’s University Education?

“What is the inflation rate of University education?”
is a question some have asked me recently while on the topic of planning for their children’s education.
So to answer your question, here is the annual inflation over the last 20 years for just the education sector in Singapore tabulated in this chart.

How Much do I Need for my Children's University Education? — Engage

Interestingly, the average headline inflation(all items) for this same period was just 1.54% but for the Education sector alone, it was 2.88%.
How is this helpful in planning for funding your children’s future education needs?
You would probably notice that in the last 20 years, there were 2 years the inflation hit 4% and above. Thus, it would be prudent to use an estimated inflation of 4-5% in our planning.
“How much do I need for my children’s University fees then?”
is usually the question which follows.
How Much do I Need for my Children's University Education? — Engage
Based on the published fees, a degree would cost somewhere from $32,000 to more than $170,000 depending on the field of study.
This is not including living expenses such as hostel accommodation, study materials and more.
Still, it is the goal of most parents in Singapore to provide university education for their children as many view it as a gift- the gift of a successful life.
After all, Singapore’s economy which was once based primarily on trade, is now one of the world’s leading global cities and a global financial hub thanks to its forward-looking world-class education system.
How do I save $79,000 – $90,000 for Business, Accounting or Engineering and more than $400,000 for Medicine?
Here are some options:
  • Save in the bank, $500 a month per child, 18 years, $108,460 (0.05% savings account rate)- enough for Business/Accountancy
  • Save in a children’s education plan, $500 a month per child, at 18 years, get $141,612 (2.95% returns)- enough for Law

Or for Medicine

  • Save in the bank, $2000 a month per child, 18 years, $433,841 (0.05% savings account rate)
  • Save in a children’s education plan, $1550 a month per child, at 18 years, get $433,549 (2.95% returns)
  • Save in an investment plan, $1300 a month per child, at 18 years get potentially $438,865 (~5.00% returns)

Pros & Cons of Saving in the Bank, in an Insurance type Education plan and Investment Plan:

How Much do I Need for my Children's University Education? — Engage

Some are deterred from saving in an education type savings plan or investment plan due to the fixed commitment period.

However, would you not agree that high commitment = high chance of reaching your goal?

The low commitment and high flexibility of saving in the bank often means we do not achieve our goals because it is all too easy to skip saving a month, two months… and then stop.

If you definitely want to see your children through to University, then you need a definite savings plan drawn up too.

What would be the most suitable plan for you? It could be one of the options mentioned above or even a combination.

Find out more by scheduling a planning session today!

 

Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

Published By:

Jillinda Hoan

“The sweetest satisfaction lies not in climbing your own Everest, but in helping others climb theirs” by Max Lucado resonates with me.  

I strongly believe in the importance of helping families and individuals make wise financial decisions so that they can enjoy peace of mind and focus on their priorities and what truly matters in their life.

Over the years, my passion for helping clients achieve their goals has helped me to develop a systematic approach to diagnosing potential financial issues in a family or medical situation as well as roadblocks to short-term and long-term financial goals.

I enjoy understanding each family’s needs and unique circumstances before designing suitable solutions, while adapting to their changing needs along the way. 

Making a difference in the lives of those I meet, enabling them to make sound financial decisions to navigate them on the path to success is a daily motivation for me.

Can I make a difference in yours?  
Find out in an exploratory discussion here!

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