As parents, one of the ways we can set up our children for success in this competitive economy we live in is by providing them with quality education. With the rising cost of living, multiple financial priorities, and uncertainty about how your child's interest will develop, planning for your child's education can be really challenging. This article provides practical steps parents can follow to plan for their child’s education.
1. Set Clear Financial Planning Child Educational Goals
Before estimating figures and calculating costs, define your educational goals for your child. In the beginning, it is important to step in as a parent and make the decisions your child can’t make yet. It is also equally important to remember your role as a parent is to guide and assist your child to achieve their own aspirations, so don’t get carried away. Consider the following questions:
What type of school do you envision for your child: public, private, or international?
Do you plan to support higher education, such as university or vocational training?
What are your long-term aspirations for your child’s education?
By clearly defining your goals, you can better assess the financial implications and tailor your savings strategy accordingly.
2. Understand the costs involved
Education costs vary based on several factors. Some of the salient factors are the types of institutions, level of education, and area of interest among others. Here are some of the main expenses you should consider:
Tuition Fees: This is usually the largest expense, so research schools and their fee structures.
Books and Supplies: Factor in the costs of textbooks, uniforms, and other necessary supplies.
Transportation: Consider whether your child will need to commute and the associated costs.
Extracurricular Activities: These can enrich your child’s education but can also add to your expenses.
Higher Education: If you intend to support your child's university education, research the costs of institutions both locally and internationally.
Having a clear understanding of these costs will help you set realistic savings targets.
3. Create a Dedicated Education Fund
Once you know the costs involved, it’s time to start saving. Here are some strategies to consider for building an education fund:
Savings Account: Open a dedicated savings account for your child's education. This can help you track your savings more effectively. Alternatively, you can use the Ndovu fund, a money market fund that will yield higher returns over time compared to traditional savings accounts. This is an option you wouldn't want to miss out on due to the low risk and high liquidity of money market funds.
Investment Accounts: Consider investment options such as mutual funds, which can yield higher returns over time compared to traditional savings accounts. Be sure to choose options that align with your risk tolerance and investment timeline.
4. Start Early and Save Consistently
Starting early and staying consistent are measurable steps towards ensuring your child receives the education they deserve. Starting early allows you to take advantage of compounding interest so that any small amount you save can grow significantly over time. For instance, if you start saving Ksh 5,000 monthly in the Ndovu fund from your child’s birth, by the time they reach university age, your child will have Ksh 5,186,006 to spend on University education.
5. Explore Scholarships and Financial Aid
As your child approaches secondary school and higher education, research available scholarships and financial aid opportunities. Many institutions in Kenya and abroad offer financial assistance based on academic merit or need. An example is the Kenyan National Education Fund which offers four-year high school scholarships to Kenyan scholars.
6. Educate Your Child about Money
As you plan to save for your child's education, remember to also develop their financial literacy and nurture healthy financial habits in them. Involve your child in discussions about finances and the importance of saving and investing. Teaching them financial literacy at an early age will empower them to make informed decisions about money management in the future. You can start by gamifying saving by giving your child an incentive to save their pocket money.
7. Reassess Your Financial Plan Regularly
As your child grows and circumstances change, it’s essential to review and adjust your financial plan regularly. Life events, such as job changes or economic fluctuations, may affect your ability to save. Regular reassessment will help ensure you stay on track to meet your educational goals.
Financial planning for your child’s education requires careful thought and proactive steps. By setting clear goals, understanding costs, creating a dedicated fund, and starting early, you can significantly ease the burden of educational expenses. Remember, investing in your child’s education is one of the most valuable investments you can make, paving the way for their future success. With a solid financial plan in place, you can help ensure your child receives the quality education they deserve.
Disclosure:
Ndovu is a regulated Robo-advisory platform operated by Ndovu Wealth Limited (‘NWL’). NWL is a Fund Manager licensed by the Capital Markets Authority (Kenya).
The information provided on this platform and the products and services offered are intended solely for persons in regions and jurisdictions where such distribution and utilization are in accordance with local laws and regulations. Ndovu does not promote its services in regions where it lacks the necessary licenses; It is exclusively available to persons residing in countries where it holds a valid license or has regulated partners. Ndovu does not extend its services to citizens of the United States, Canada, Japan, and other restricted territories.
Disclaimer:
All ETF products are subject to risk, including country/regional, liquidity, and currency risks. Market prices of securities within the ETF may rise and fall, sometimes rapidly and unpredictably.
While ETFs provide diversification through exposure to a basket of securities, they do not eliminate the risk of loss. Diversification does not ensure a profit or protect against a loss. These are non-cis products and are registered by the SEC.
Comments