Wednesday, February 3, 2010

Your Money And Family: Higher Education Savings

Imagine if your children were grown up without having higher education. Guilty filled your eyes when see your children working as construction worker or ordinary dispatch. You have brilliant and talented children but unfortunately you don't have enough money or you have to put away your money for other investment. Whatever reasons they are, you should portion out little sum of money for the bright future of your children.

Bear in mind that higher education is more important these days as people racing their own children to take a degree and so on. In 2005, the Malaysian people with bachelor's degree hold an account of 30%. The government of Malaysia envision that there's will be up to 40% in year 2010. That's 10% in 5 years! So I assume that that percentage is consistently increasing over the years. As a result, when my son reaches the age of 21, almost all Malaysian people with age of 17-23 age, are enrolled with bachelor's degree. (Transnational Higher Education In Malaysia). Eventually, the competition is getting tougher and fierce, we should not let our children being left out. I will make sure that my Amirul can take that challenge and I will stay right behind him.

So why saving for higher education?
For me, it is important so that I can hedge the inflation which increasing steadily for approximately 6%, according to The Star Newspaper, 27th May, 2007.

For an instance, my tuition fees of public university for pursuing Financial Banking Degree was RM18000 (RM3000/per semester), I forecast that my Amirul tuition's fee will be amounting RM 61,192.14 at the age of 21 (Calculation of compound interest: 18000 x [(1 + .06)21]). I need to save RM581.50 per month for 21 years. (savings + 10% interest).

Say at that time I have lost my belief in public university, if I want my children to study at private university, then his tuition's fee is RM151,280.58 in year 2031 (Total tuition fee of Bachelor's Degree in Accountancy in KLIUC: RM44,500). That is RM1,438.52 per month for 21 years. (savings + 10% interest).

If let say in 2031, Amirul doesn't have satisfaction with local providers and pursuing for overseas studies. To calculate the inflation, we have to take the estimated cost of pursuing Degree of Finance in Australia for study case. Therefore, the estimated cost of study is tripled from RM300,000 to RM1,019,869.08. I need to save RM9,696.71 per month for 21 year. (savings + 10% interest). What? This is madness!!

Furthermore, there's a few arguments that local providers cannot cater the need of quality higher education, people are raising questions about the credibility of local universities as well as private universities. That's why parents work hard until their nose bleed just nurture their children with the best education providers by sending them overseas such as United Kingdoms and Australia; and their are willing to shovel hundred thousands of Ringgit just to secure their love ones with higher quality education.

Where to put savings?
This decision is up to father who wisely choose a variety of education plan offers in Malaysia. Nonetheless, I suggest to choose the investments that have mild risk but quite steady returns such as Amanah Saham Bumiputera or Amanah Saham Nasional which have consistency of 10% dividend per year.
As for conclusion, if you don't have enough fund to cover the tuition fee, the world has yet to end because there's a good financial provider available for our children such as PTPTN. (Honey, please check whether my name is blacklisted or not). But there's a need for our children and our job is to support them no matter what. Plus, it's always worthy to invest for our young ones. So how much did you need to save? The answer may vary, it depends on your path of choosing the local providers; public universities and private universities or overseas study. It's your call; your money or your children.

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Dear Readers, welcome to my personal blog. This blog is about the story of my little family and its members. You can find my posts are mostly about parenting and family matters. Some of my posts are not concerning parenthood at all like cooking and shopping because I would like some diversify in my parenthood blog. Sharing information to my fellow friends and loyal reader is the main reason to build this parenthood blog.

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My name is kambingbujang. I am 27-year old mum with Amirul beside me. Now I'm carrying around his future younger brother/sister in my tummy.

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