NO FAIL-PROOF SAVING PLAN FOR YOUR KIDS’ UNI? YOU’RE LIMITING THEIR FUTURE… AND YOURS TOO

So you have young kids and think you’ll be sending them to study abroad? This is a common thought among young parents but I’ve encountered many cases that these “dreams” become shattered because there’s no proper fail-proof saving plan early enough. I'm sharing a real case here, and please don’t repeat this in your family…

REAL CASE

When I met Mr and Mrs A (using made-up names), they were in their late 50s. Back then, their son Paul was about to graduate from university in the States. They did all they could to fulfil their son’s dream of studying architecture at UC Berkley. They didn’t realise they needed to prepare money for his university school fees, accommodation and living costs until Paul turned 16. Mr & Mrs A were directors in their companies earning around HK$200K per month together but they don’t have much savings because they are paying 70+% of their income for their mortgage, and the rest for Paul’s school fees and other household expenses. What’s worse, they have a huge amount of unpaid loans accumulated from unplanned annual tax expenses, and false hope on stocks which they thought would yield enough gains to cover Paul’s uni fees but dropped 90% in value.

They hustled hard to get freelance jobs to cover Paul’s expenses in the States and wanted to sell their apartment to cash out a bit, but the market price was too low in their opinion. Now that they are seeing their next retirement “check-point”, they are panicking about what to do with all the outstanding loans and no retirement savings apart from the MPF pension which was at a loss due to no management at all.

THE PROBLEM

These problems are very common, and leave no option for the couple at all. Are you encountering any of these too?

• No prior money planning before giving birth
• No open communication between the couple on how to tackle the loans or ways to get help
• No long-term planning for retirement 20 years ahead
• Just going from checkpoint to checkpoint in life (as discussed in this article )
• When there is financial pressure, going all in on risky investments in the hopes of earning quick money
• Didn’t do any money allocation planning before purchasing an apartment. Thought the price would go up, so bought one that was out of budget in the hopes of maximizing profit (money allocation tips in this article )

THE SAFE & EASY WAY

There is an easy and safe way to be sure you have enough money to pay for your kids’ Uni expenses abroad. Make sure you do this before your kid turns 3 years old so you have enough time for steady money growth:

1. Decide on the top 3 choices of university locations (e.g. UK, USA, Canada, Australia, etc)
2. Calculate the average tuition fees, number of years, accommodation and cost of living for each location (including inflation)
3. If you don’t like investing, start a savings plan with compound interest. If you start early enough and leave 15-18 years for the money to grow, the initial capital will be much smaller. Have a financial planner help you with the calculation to reach your goal. (Book a free consultation here if you wish to get more insights)
4. If you have investment knowledge, divide this amount by 2, in which 50% can be an investment and the other 50% as compound interest savings so you have at least half of the money steadily growing, avoiding total loss.

START ASAP

The earlier you start, the smaller the amount you need to put in to reach your goal. What’s more, you avoid delaying your retirement, and all the unnecessary loans. Book a free consultation to plan for your kids and yourself here . Speak soon!

If you are interested in learning more about our retirement & life planning process, you can visit this page .

This article originally appeared on GraceChan.co .

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