College Savings made simple

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.

Applying for a personal loan or using a credit card with your bank at a low interest rate is another practical option if you need quick access to cash to cover such expenses. Be sure to always read the terms and conditions associated with any line of credit as it is fully the responsibility of the borrower to understand his or her financial liabilities.

Speak to an advisor

The thought of saving for college is daunting for many people who are unsure of where they stand financially or what they need to do to achieve their goals. This is where a financial advisor comes in to offer his or her expertise, guidance and support in creating a structured education savings plan that’s right for you.

Citigold customers have access to dedicated relationship managers and a client advisory team who they can work with to create a comprehensive and structured wealth management strategy tailored to their unique needs. In addition, these customers can avail a wide range of benefits and perks such as travel rewards, discounts and deals on dining and entertainment and preferential foreign exchange rates.

Other tips and tricks

Financial experts caution against scaling back on your retirement savings or other financial goals in order to pay for college, as this may have consequences and keep you from securing your financial independence in the long term.

Think of your monthly savings for this purpose as a bill instead of money that is kept aside for the future. Also, get help whenever you can, whether it is in the form of scholarships, financial aid or student discounts, as these benefits will decrease your financial burden.

There is no one-size-fits-all approach to saving for this important milestone in your children’s lives. You may find that you may need to use a combination of different plans and strategies to meet your goals and maintain your lifestyle at the same time. If you are serious about saving for college, there is no better time than now to put the above-mentioned strategies to good use.

Disclaimer

  • Investment products are not bank deposits or obligations or guaranteed by Citibank N.A., Citigroup Inc. or any of its affiliates or subsidiaries unless specifically stated. Investment products are not insured by government or governmental agencies. Investment and Treasury products are subject to Investment risk, including possible loss of principal amount invested. Past performance is not indicative of future results: prices can go up or down. Investors investing in investments and/or treasury products denominated in foreign (non-local) currency should be aware of the risk of the exchange rate fluctuations that may cause loss of principal when foreign currency is converted to the investors home currency. Investment and Treasury products are not available to U.S. persons. All applications for investments and treasury products are subject to Terms and Conditions of the individual investment and Treasury products. Customer understands that it is his/her responsibility to seek legal and/or tax advice regarding the legal and tax consequences of his/her investment transactions. If customer changes residence, citizenship, nationality, or place of work, it is his/her responsibility to understand how his/her investment transactions are affected by such change and comply with all applicable laws and regulations as and when such becomes applicable. Customer understands that Citibank does not provide legal and/or tax advise and are not responsible for advising him/her on the laws pertaining to his/her transaction. Citibank UAE does not provide continuous monitoring of existing customer holdings. Investment Account is the term used for jointly mentioning a Mutual Fund Account and Securities Brokerage Account. Mutual Fund Account is used to trade in Mutual Funds and Securities Brokerage Account to buy securities such as equities, bonds, Exchange traded funds etc.

    Citibank Terms and Conditions apply, are subject to change and are available upon request. For the current Terms and Conditions, please visit our website www.citibank.ae. Partner terms and conditions also apply. All offers are made available on a best-effort basis and at the sole discretion of Citibank N. A. Citibank N. A. makes no warranties and assumes no liability or responsibility with respect to the product and services provided by partner(s) / other entity(ies).

  • Citibank N.A. will not be responsible for the rejection of any application/claim under this policy. Citibank N.A. does not underwrite or issue insurance policies. Citibank N.A. provides customer support by way of receiving payments from the customers and forwarding them to Zurich International Life, in addition to making such insurance products available to its customers. Premiums contributed by the Customer under this policy are not bank deposits or any other obligation of, or guaranteed by Citibank N.A., Citigroup or any of their affiliates and are subject to risks and possible loss of the principal amount invested.

  • Insurance products are optional, underwritten by insurers, subject to exclusions, terms and conditions, medical underwriting requirements as listed in the policy document. Citibank N.A. does not underwrite or issue insurance policies and is not responsible for rejection of any application/claim. Citibank N.A. makes available insurance products and provides customer support by receiving payments and forwarding them to the Insurer. If policies are cancelled within 30 days of enrollment, customers are entitled to receive refund of premium paid or applicable account value. For policy cancellations after 30 days period, customer will be entitled to receive applicable surrender value after deduction of surrender charges. Citibank Terms and Conditions apply, are subject to change and can be found at www.citibank.ae. Insurance products are not available to US persons. If a customer changes residence, citizenship, nationality or place of work, it is the customer's responsibility to understand how their insurance is affected by such change and comply with all applicable laws and regulations. Citibank does not provide legal and/or tax advice and is not responsible for advising on the laws pertaining to any insurance transaction.

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Joumana Saad is an American freelance journalist and media personality based in Dubai. She writes about financial, media and technology news and topics.

This article is intended to provide general information about finance and investments and does not replace or should be taken as professional financial advice. The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article except information on Citibank N.A. – UAE products referenced herein.
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