‘I believe that children are our future. Teach them well and let them lead the way.’ – Whitney Houston
Education is an expensive endeavour within Pakistan, if you want your children to study in any of the top rated schools, colleges and universities the country, or outside. Normally, if you plan to send your child to a primary school, cost can vary anywhere between PKR 3,500 a month to 17,000 depending on the school. Similar fee structures apply for secondary schools as well. If you want your child to study and give papers for Cambridge International Examinations (O’levels and A’levels), each paper can cost a minimum of PKR 6,000/-. Fee can be revised on a yearly basis making it costlier to educate your children. Further to that, universities range on an astronomical level in terms of cost, on a salary that supports an average family of four. Admission fee, and children starting at an early age at day care and Montessori, can add a lot of cost and financial stress to the household budget.
Here, let us evaluate some of the ways you can plan for your children’s education without having to break the bank every time a fee voucher is due!
Saving Options for Primary and Secondary School Education:
Schools in Pakistan generally require a three-month advance payment. That means a good chunk of your salary or income is going away into education during a particular month. Considering an average family’s general expenses, and expenses according to months and seasons of the year (say, Eid, Ramadan or Winter Vacations), it can get quite difficult to manage. Some of these key tips may be helpful for you:
- Start saving early. The earlier you start, the easier it becomes to bear educational expenses.
- Take a tip from your grandma and save all the loose change too. We often don’t realize how much they amount to eventually!
- Set aside an amount every month rather than waiting for the three-month duration. This helps with planning the budget too.
- Teach your children about saving for their own education too. That eidi can be a good chunk of change that can be put towards education.
Simply keeping aside funds is actually harmful as you lose value on this money. This means that if you are simply sitting on the money you have just saved, it erodes as inflation rises. For example, the same PKR 100/- was worth far more ten years ago, than it is now. Now that you are saving up, it is time to get into investing the bucks:
- Evaluate Mutual Funds options. You can continue to invest in small amounts (called Systematic Investment Plans) and earn some decent returns from it too. An asset manager or a fund manager usually takes care of the investment portfolio within the fund, which means you don’t have to worry too much about what combination of assets to purchase (stocks, bonds, or the like).
- Invest in some short-term bank certificates. Similar to how you would invest in a mutual fund, you can invest in short-term bank certificates. While rates of return in these certificates are significantly less than mutual funds, it still means that you earn returns that you can use to pay the fee on a quarterly basis. For example, with the Monthly Mudarabah Certificate by Meezan Bank, you can learn an average of 3.59% a month on your investment.
Saving Options for Higher Education:
Higher education can be costly depending on the type of study or specialization your child wants to go for, and in which university, either in Pakistan or outside the country. But if you start thinking about saving up and investing early on, you can build a good fund for your child to go to a university of their choice!
- Evaluate education savings plans: You can consider savings plans designed specifically towards higher education. For example, UBL’s Children Savings Plan can help you to earn a decent sum of money in 15 years. If you invest PKR 5,000 on a monthly basis, from when your child is 3 years of age, you would have an approximate PKR 1,950,000 to invest in your child’s education, when they turn 18.
- Evaluate education insurance plans: You can also consider investing in an insurance plan with an insurance company. Education insurance plans work in a similar way as well to how your education savings plan functions.
There are other options, though not designed specifically for educational needs, but can work for your specific case. For example, mutual funds, saving certificates, bonds, etc. are options, though not designed specifically for educational needs, that you can explore further to invest and gain returns.