Whether you want your children to attend university, or want to help them start a business after leaving school, it will cost money. It's not too soon to start looking at how much, and how to get it. With all the news of the credit crunch, the global recession, the stock markets falling and plummeting property prices, it's very easy to lose sight of your long-term goals. Chances are that you are now likely to spend, wanting to keep any money you have in the bank. It's a shame, however, that we haven't heard enough in the press about how down markets present a canny investor with golden opportunities.
Your long-term goals may not have changed during this financial crisis: you still wish to retire comfortably, and you still want to protect your family if you're no longer around. Of all the financial goals for which we plan and save, here's one that is sometimes made a low priority: would you like your children to go to university? Of course, this does depend on how your children feel, and they may not know for a good few years. I personally have fond memories of university, and I'm grateful to my parents for allowing me the opportunity. So, do you want to give your children the option of going to university, even if they are not thinking about it yet?
As expatriates, it would be fair to say that many of us would like our children to attend university in our home country. It is likely that they would be classed as overseas students, unless they have been resident in that country for some years prior to the course starting. The difference between overseas student fees and resident student fees can be huge. When was the last time you checked? Taking the UK as an example, I checked last year's course fee charges from research put together by Mike Reddin of the London School of Economics. For a typical undergraduate course as a UK resident student most universities charged £3,145 per year for the course alone. As an overseas student this fee would be £12,250 for Birmingham University, £11,700 for Cardiff, and £13,100 for Bristol.
So a four-year course at Bristol would cost you more than £52,000 per child. This doesn't take into account their rent, books, clothes, council tax, gas, electricity ... the list goes on. As an overseas student this is easily more than £100,000 per child of money that you may be asked to provide. When my father sent me to university, we had been living abroad for years, and this difference in the fee structure came as a surprise. By the look on his face at the time, I'm sure he would have appreciated the opportunity to save this money beforehand, rather than have to find it at short notice. And most universities around the world are raising their fees at a pace higher than inflation. This becomes critical when calculating how much you will need to save to build this pot of cash. Planning for £100,000 when you might actually need £220,000 would be disappointing, to say the least.
So how do you do it? How do you get yourself into the position where you can feel that this bit of your children's future is covered? It is far easier, and far more sensible, to save for something than it is to borrow money for it later on. Put some money away each month. Start now. The longer you save, the smaller the amount you can get away with each month, as your money grows for longer. I know people who have education fee savings plans in place before their children are born. Yes, I am one of these people, and unashamed to say it aloud.
Discuss your budget with a professional financial adviser, to see how much you could realistically afford each month. It is better to start small and increase the payments later on, than to not start anything at all. What do you gain if you do? A more secure future for your children, which is generally considered a good thing in parenting circles. Stuart Birch is a financial consultant with Acuma Wealth Management in Dubai. He can be reached at firstname.lastname@example.org