The skyrocketing cost of higher education and rising inflation along with slower wage growth have made it more challenging than ever for families to save for university. This reality has left many parents shouldering a major financial burden by the time their children are ready to head off to college.
In the UAE, education is the second biggest expense for expats after rent. Although it may feel like an impossible task to save enough money for higher education these days, there are still plenty of financial options, strategies, tools and tips that can help you navigate this journey and avoid racking up a mountain of debts.
Start by setting your goals
The type of savings strategy you go for will very much depend on several important factors such as your financial goals, the amount of time you have to save and your comfort level with taking on investment risk.
If you are someone who is keen to start early and gradually build up your savings over a longer period of time, you may want to consider an education savings plan, which is one of the most popular options for parents today. These savings plans usually offer many benefits such as flexibility and the ability to customize according to your preferences and needs.
Global Choice underwritten by Zurich International Life, distributed by Citibank UAE, for example, is a flexible insurance plan designed to help you save on a regular basis and build a portfolio in line with your risk profile. With this plan, you can customize your payment schedule, access your funds when needed and add on optional benefit such as life insurance and accidental death coverage.
Try these useful tools
Most banks and financial institutions offer tools that can help you get started with your savings journey. A college savings calculator is a practical tool that can be used to determine the amount of time and money you need to budget in order to meet your savings goal. When using the calculator, you will most likely be asked about the age of your child, estimated yearly cost of university tuition, the percentage of the total cost that you would like the savings to cover, monthly income and current savings. Once you insert all of this information, it will tell you how close or far off you are from reaching your savings targets and recommend any necessary adjustments.
Now that you have a better idea of your goals and strategy, you will need to ensure that you track your savings and spending on a day-to-day basis. Budgeting and saving apps have become popular options for busy parents as they are designed to prevent overspending. Those apps can sync all of your accounts in one place, helping you make more informed financial decisions.
Factor in extra costs
Keep in mind that you will be taking on several additional costs beyond tuition. Books, living expenses, health insurance and student fees are just some of the costs involved and all of these can certainly add up. It’s also important to remember that these extra costs, along with tuition, are likely to increase year after year, so you will be paying more by the time your child actually enrolls.