Planning for Your Children’s Education1
Financial experts say parents who fail to plan properly for their children’s education end up battling to send them to school. In this article culled from Punch Newspaper, Simon Ejembi writes on ways parents can avoid such a fate.
It is quite common to hear statements such as “Kids grow so fast”, “Wow, you’ve grown so big, overnight”. While many parents are well aware of how fast their babies can grow, they fail to recognise and plan for these needs that come with that growth. Consequently, they fail to plan properly and pile pressure on themselves. One area that is commonly neglected by many parents is education. They wait until the kids are old enough to go to school before they start working towards financing their education.
In a world where bills and responsibilities are ever-increasing, financial experts say this is a costly mistake.
The Lead Trainer, YoungBiz Nigeria, an organisation that trains children to be financially responsible,Mr. Shogo Aminu, says, “Many of these parents are reactive and not proactive, which is the category that most people fall into.”
Aminu, who say the best time to start planning for a child’s education is now or even before they are born, stresses that planning and saving for the child’s education “has to become a habit” for parents.
“When you get married, you plan to have a child. So you also have to plan about the child’s education,” says Aminu.
For people who already have children in school with no plan in place, he advises that as they battle with the financial pressure, they also need to find a way to save for the future. For example if a child is in secondary school, it is advised that the parents should start planning for their university education now.
For Aminu, the most important thing is that “parents need to learn how to plan.” Indeed, many experts have stressed that the first thing to do is to plan. All other decisions are based on the plan that you have.
He stresses, “The clear thing is that for the moment they (parents) need to find a way round their many responsibilities, so they can begin to plan for the future”.
Chose a type of education
In planning, you have to decide what you want for your children in terms of education. What type of education do you want them to have? Do you want them to go to public schools or private schools? Are you considering a local university or polytechnic or are you planning to go beyond that and send them abroad? All these determine what the education will cost.
Having decided the type of education you want the children to have, among other things, the next thing is to save. To save, however, Shogo says you have to consider what you earn.
He says, “After deciding what I want for my children, the next thing is to look at my take home pay in terms of my own standard of living; and based on the set target I start saving. Interestingly, there are quite a number of ways in which that could be done.
“For instance there is this rule of compound interest of money, that is how long it takes for a particular amount to be doubled; it is called the “rule of 72”, which is more like, if I’m saving a particular amount, how long will it take for me to double the amount? For example if I earn N50,000 monthly and I’m able to save N2,000 monthly by the end of the year it will be N24,000. If you look at the interest it gets to a particular amount but the real good thing is the rule of compound interest, which means that if I have N24, 000 and I keep it over years it will keep increasing, and increasing.”
He explained that because such a method of saving may require years to raise the required sum, it could be used to save for university education. He stressed that the most important thing about saving is making a habit of it.
Don’t just save, invest
Apart from saving, financial experts say it is also wise to invest in property, stocks and the likes; especially for long term targets.
According to Aminu, and investment in land is a safe option to consider when looking for an alternative to saving.
“Looking at land, since its value appreciates, buy a piece of land in an area, maybe develop it, and get the Certificate of Occupancy,” he advises. He said explained that by tying down the land and keeping it for years, its value is bound to appreciate.
Some financial experts say investing in stocks is a good option. They explain that since shares are a long term investment, they are a good way of saving money for the future. With the crisis witnessed in the global markets in recent times, they however, warn that parents need to understand the market and seek professional guidance if the opt to invest in shares as part of their plan for financing their children’s education.
Many successful people today were only able to go to school because they got scholarships to do so. Experts say if parents pay proper attention to the education of their children, they might develop the intelligence required to win scholarships in the future, thereby saving their parents hundreds of thousands if not millions. While Aminu admits that hoping on a scholarship could be likened to trying to win a lottery, he stresses that “it also happens a lot”.
He says, “If you have time for your family and, beyond lesson teachers, pay close attention to the education of the children and if you can really push them, you might be surprised that they will do very well and win scholarships. The main thing is that there is a drive, a plan, and taking concrete actions towards it.”
Consider trust accounts
Financial experts say parents can also opt for trust accounts in their bid to finance their children’s education without undue pressure.
According to Aminu, this involves putting a lump sum into an account after which you can deposit a particular on monthly or weekly basis. He explains that a number of banks were doing this in the past, adding that even although some stopped, they are still some trustees which are subsidiaries of these banks still doing that.
He says, “Some insurance companies have “Child Saving Accounts” and some banks also have “Kiddies Account”.
He explains that the advantage of special accounts is that parents can’t withdraw from them before a predetermined date.
“Some trust accounts allows you to withdraw but money will be paid to a school. So, it is a way to keep the money out of your hands.”
Don’t leave the children out
In doing all of the above, it is important that parents involve their children and seek appropriate insurance cover. According to experts, it is important that children understand the importance of planning for the future and savings. That way not only will their demand for toys and trivial things be minimal, they will also assist their parents in the process by saving a part of cash gifts they receive.
Bear in mind that financing your children’s education goes beyond just paying their tuition fees, if they are not financially responsible, it is almost certain that your savings will not be enough.
Source: Punch Newspaper