Lifestyle
Educating your children is one of your most important duties as a parent. Their education is closely tied to building a secure future for them and preparing them for a successful career that leads to financial independence. Like any parent, you want to provide the best for your children, and this requires careful financial planning, taking into account all stages of your child's life, from the early school years to the final years of university.
With the continuous rise in education costs, it can sometimes be challenging to provide your child with the quality education they deserve. Since education is an essential need that we cannot abandon or ignore, financial planning becomes increasingly crucial day by day, and this is what we’ll help you with in this article.
Estimate the cost of their education
Before you start planning, you need to know the approximate amount you're aiming to plan for. To estimate the cost of your children's education, there are two critical factors to consider:
Type of education: What type of education do you want to provide for your children? This includes your choice of school, each of which has its own tuition fees. It also includes your children's choice of university major and the university they wish to attend.
Inflation: You may wonder, what does education have to do with inflation? We'll tell you. Due to inflation, tuition fees are continuously rising. For example, if you have a 7-year-old daughter today and she aspires to become a pediatrician when she grows up, you should know that if the cost of medical school today is, let's say, 15,000 JOD, studying medicine will cost more in 2034 when your daughter is 18. This is, of course, due to inflation.
Therefore, take into account past and expected inflation rates when estimating the cost of education.
Start saving early
As soon as your child comes into the world and sees the light for the first time, financial responsibilities come with them. This is the best time to start financially planning for their education. You might tell yourself, "It's still too early," yes, you have a few years before they start their educational journey, but the earlier you start saving, the better your chances of accumulating a sufficient amount over time to cover your children's education. So, use time to your advantage! Here are two steps to help you adopt the habit of saving for your children's education:
- Set a budget: Creating a monthly budget will help you allocate a portion of your monthly income to your children's education expenses. Divide your salary among all your needs, and monitor all your expenses to know if there are any areas where you need to cut down on spending, should you need to. This way, you can allocate 10% - 20% of your income as savings for education.
- Open a savings account in your child's name: It is essential to separate the savings intended for your children's education from your other funds to reduce the chances of accidental or intentional spending. You can open a savings account for children under 18 years of age, and the account will be under your supervision until they reach the legal age.
- Consider long-term investment options: Let's assume you've indeed started planning early and invested a sum of 1,000 JOD today. By the time your child goes to college in, say, 10 years, you will have accumulated substantial profits that can cover the cost of university tuition.
When it comes to investment, you have many options. Conduct the necessary research to find the right option for you. At Bank al Etihad, we offer various investment options and tools to help you achieve your financial goals. Learn more here, and don't hesitate to reach out to one of our wealth management advisors.
Regularly review your financial plan
To ensure you are on the right track, regularly review your financial plan to assess your progress and consider any new factors that may affect your financial situation. When necessary, adjust your investment and savings plans to ensure that your plan remains effective in reaching your goal efficiently.
Explore other options
If you missed the opportunity to plan early for your children's education and now find yourself needing to cover school or university tuition fees, don't worry. You still have options with Bank al Etihad to help you:
- Get an additional educational loan with your personal loan: You can now apply for our personal loan and obtain an additional educational loan of up to 15% of your original loan amount at 0% interest to cover school or university tuition fees. The educational loan comes with a repayment period of up to 18 months, while the original loan has a repayment period of up to 8 years. To learn more, click here.
- Installment of school or university tuition fees with our credit cards: You can convert school or university tuition fees into installments at 0% interest for up to 12 months when using any of Bank al Etihad's credit cards. To learn more about our flexible installment plans, click here.
We hope we have helped you plan for your children's future, and we wish them an enjoyable educational journey and a bright future they will thank you for later!
