One parent whose eldest is just 9 years old has already started investing to pay for college — yet another just goes with the flow and doesn’t save at all. Some also rely on loans.
In the UAE, where several financial solutions are available, providing for children’s education varies from one family to another. A cross-section of individuals shared with Khaleej Times how they manage their budgets to meet schooling requirements.
Parent Adil Eschack is among those who plan ahead. “I follow a goal-based savings plan to save up for my children’s college education,” he said.
“The first step is to decide what and where they will study. The second step is to save the amount by calculating how many years I have. I need to identify investments that I can put aside which will make the required amount available,” Eschack added. Among the options he considered were fixed deposits, bonds, stock market and property investments, and mutual funds.
A recent survey showed that 80 per cent of parents in the UAE spend up to 40 per cent of their monthly income to pay tuition fees. Over one-third – 34 per cent – UAE residents feel “very confident” that they will be in a position to support their children’s further education financially.
Rayner Britto, head of distribution at Zurich International Life, said parents are now more aware of the need not only to save up for their children’s education — but also ensure that the fund is protected in case of an unforeseen event.
Eschack said the goal is to make sure that your child has access to the money you are saving.
“What happens if God forbid something happens to you? So, it is important to look at some insurance-linked products in your investment mix. The return on these products is less, but they have insurance which will help the kids in the event of unforeseen incidents,” he said.
Mum to four Fazla Backer said she and her husband save in the form of “systematic investment plans in mutual funds in India”, she said.
“Kids’ education is an inevitable part of life and like everything, a good, planned approach to it makes life easier when the time of need comes.”
The Dubai resident said the savings came in handy when her eldest enrolled for college in Netherlands. “Since we had been saving for a while, we had the means to make sure that we could pay for the course that he picked,” she said. “My advice to all parents is that even small amounts saved frequently over a period of time, monthly or so, results in significant savings. It can be a huge help at a time when you need it the most.”
Britto suggested that parents should set aside some amount every month that will help finance children’s higher education.
Dubai-based banker Haren Negandhi is someone who follows that advice “I allocate a certain amount every month to invest,” he said. “I have been investing for about 10 years now during which I have made money and I have made a lot of mistakes. It has been a great learning experience for me. I always advice people to start investing when they are 18 years old. It is sad that financial skills are not taught at schools.”
The father to a 11-year-old boy, Haren says he is confident that his investments will help pay for the education of his child. “I keep aside at least 33% of my total income to invest,” he said. “As of now, the returns from that should be enough to pay off for his education completely. The key is to be patient. Most people want quick returns and that is risky. You need to have patience and think long term.”
The survey found that 39 per cent of parents dig deeper into their personal savings and 15 per cent have resorted to taking personal loans to pay tuition fees.
Father of two Riyas Muhammed is one of those who doesn’t have any savings for his children’s education. “I have never lived life according to a plan,” he said. “I have some money in the bank, but I don’t actively save for the future. I am sure that when the time comes, I will come up with a way to pay for my children’s education.”
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