Why it’s never too early to save for your child’s education

Posted on: 4th November 2022 in Financial Planning

Education planning is a crucial part of an investment plan that few parents really think about. It is never too early to start saving for your child’s education. However, it is not that odd that education planning is not at the top of our list when it comes to investing our money. We are used to thinking that an investment should generate some income when we still work or go into retirement. 

Education planning is more about perspective. Planning your child’s education means that you should start saving as soon as possible to be able to offer the best options possible. Making an early start helps you save money in the process, which you would be able to allocate to other needs. 

This blog aims to give you answers to all your questions revolving around education planning.

Education costs follow the cost of living spike

Just like everything else in the last two years, education costs have risen to unprecedented levels. School and university fees increase year by year. Student accommodation has followed the price rent rise, making it difficult for students to find even a simple room to live in. Another factor that could make your child’s education more expensive is the bureaucracy and the trips if you plan to send it to another country. 

According to a survey published by MillionPlus Group, an association of modern universities in the UK educating more than a million students, “more than 300,000 undergraduates across the UK will be hardest hit financially in the coming academic year because of rising costs of food, transport, rent and energy.”

Economists don’t feel optimistic about the economy as inflation hits family budgets. Leaving education planning out of your investment plan’s equation would be a serious mistake as you can’t be sure that you will be able to cover it at a later stage, 5 or 10 years down the line.

If you don’t plan as every parent should, your child might have to take a student loan that could take many years to repay. According to a report shared by PwC, 54% of millennials expressed concern when asked about their ability to repay their student loan debt.

How expensive is education nowadays?

The cost of education has risen considerably in the last few years in the UK. However, in other countries, such as the UAE, authorities have announced that tuition fees will remain on hold this year.

Tuition costs in the UK

The ‘home status’ charge is, in general, a fee that is paid by local students, students who are nationals of Ireland, and students who are from the European Union, the European Economic Area, or Switzerland.
The cost referred to as “international” involves the remaining non-EU and non-EEA students who are required to pay higher tuition, which is sometimes twice or even three times as much.

There is a wide range of options for tuition prices at public universities in the UK. The so-called “home” fee can range anywhere from £5,300 to 10,000 every academic year, with the exact amount being determined by the university, the field of study, and the amount of time spent there.

In most cases, an additional £2,800–7,500 is required to cover the ‘international’ charge in addition to the ‘home’ price. It is possible that, in some instances, it will be two or even three times higher than the ‘home’ fee.

Education fees in the UAE

The UAE government seems to have realised that educational expenses have added more weight to family budgets. According to an Arabian Business report, “in March 2022, the Knowledge and Human Development Authority (KHDA) announced that schools would not be allowed to raise tuition fees this year. The last permitted fee increase was for the academic year 2019-20.”

Holborn was established in Dubai almost 25 years ago. Our teams of experienced and fully qualified financial advisers have helped thousands of expats and their families to achieve their financial goals. Education planning should be a top priority if you plan to move to the UAE with your family. For more information, read all you need to know about education in the UAE and get in touch with our team to build the financial plan of your dreams. 

How can I save for my child’s education?

Financial advisers note that parents’ biggest concern regarding education planning is funding. Although finding the funds is not the easiest task, consultants suggest that the earliest you start, the less you have to save as your dedicated account will be growing. 

Jumbo insurance for high-net-worth individuals (HNWI)

A special whole-of-life type of insurance, or as financial experts call it, “jumbo insurance”, is an excellent option for high-net-worth individuals who want to finance their children’s education whilst enjoying the benefits of such a comprehensive product. 

For many, this type of protection solution is a necessity allowing the life insurance company to take over the burden and financial responsibility of significant pay-outs in the event of a policyholder’s death and therefore averting possible catastrophes, as well as securing your financial future for family members and even a business.

Holborn has access to exclusive jumbo insurance programmes designed by the largest insurance providers in the world. High-net-worth individuals can take advantage of many opportunities such as this one: if required, to draw down up to 5% of the accumulating cash account from year 11 onwards without affecting the headline level of cover, meaning that policy becomes a multifunctional one. Funds withdrawn can cover even the highest tuition fees and primary, secondary school or college costs.

For more information on jumbo insurance, fill in the contact form, and our qualified advisers will let you know more about its benefits.

Regular savings accounts for average budgets

Regular savings accounts are frequently offered for a predetermined period of time, such as one year, and are intended to encourage youngsters to save a certain amount of money on a monthly basis. If you withdraw money from the account before the specified period has passed, the interest rate on the account may be reduced.

Because of this, the interest paid on these accounts is typically higher than the interest paid on sight accounts. A savings plan that involves regular contributions is ideal for people who earn median incomes.

At Holborn, we have the necessary experience and range of regular savings products to offer you suitable to your individual circumstances. 

Plan your child’s education with Holborn

If you’re a new parent, you might want to start putting money away right now so you can provide for your kids down the road. This is not always simple, especially when living costs are on the rise and inflation is reducing your disposable income. But there are ways to build a reliable budget that will assist in reaching family objectives. Education expenses will never be a problem for you if you make the right moves at the right moment.

Prioritising one’s education has never been more crucial. Expert financial advisers at Holborn are here to direct you toward the most efficient means of accomplishing your financial goals. Feel free to use the contact form below to get in touch with us.