It’s never too early to plan for the future, especially when that future includes your child’s education. “But in my country, university is free, I don’t need to save.” Not quite, tuition is just a part of the cost of university life; there’s also living expenses, study materials, travel, and perhaps even overseas experiences. Regardless of where you live, starting a savings plan for your child’s education is not just a wise move, it’s a necessity.
In Europe tuition fees can vary significantly from nation to nation or even from type of university like private versus public. According to a report by Study in Europe, EU students can expect to pay tuition fees ranging from a few hundred euros per year in countries like Lithuania to several thousand in others.
Usually, non-EU students typically pay higher tuition compared to their EU counterparts. So, even if you live in a country with relatively low tuition costs, you might find yourself facing a hefty bill if your child wants to study abroad.
It’s overwhelming, thinking about savings enough to cover your child, or children’s education but there’s this thing called investing. Investing isn’t simply about making money; it’s a strategic approach to planning for the future, especially when that future involves your child’s university education.
Investing in your child’s education is akin to planting a seed. You nurture it with your savings, and over time, you watch it grow into a robust tree. And just like a tree, your investment can provide shade — in the form of financial security — to your child when they step into the world of higher education.
There are a lot of ways to invest for your child’s education. Traditional savings accounts, while low risk, often offer modest interest rates and sometimes even negative rates because of inflation. On the other hand, stock market investments, while higher risk, can potentially yield higher returns, allowing your savings to grow more rapidly.
Then there are education-specific investment options such as education savings accounts or prepaid tuition plans. These can offer tax advantages and can be specifically geared towards saving for education.
But how much should you save? That’s a question that doesn’t have a one-size-fits-all answer. It depends on a lot of different of factors, including the expected cost of education, your financial situation, your child’s potential scholarship opportunities, and your risk tolerance.
To make it easier for you, we’ve developed the LifeGoals Goal Calculator. This tool provides an estimate of the amount you need to save for your child’s education based on various factors, such as the type of education, location, and your current savings.
Let’s say your child wants to attend a university that charges €12,000 per year in tuition fees. If your child is currently five years old, that gives you around 13 years to save. Using our goal calculator, you’ll find that you need to save approximately €77 per week to reach this goal.
This might seem daunting, but remember, this is where investing comes into play. By investing your savings, you could potentially achieve higher returns, reducing the amount you need to save each week.
Investing isn’t just about budgeting or stashing money away in a piggy bank; it’s a strategic and forward-thinking move to ensure a brighter future for your child. It’s about understanding the power of compound interest, the potential of the stock market, and the importance of asset allocation, all while focusing on your child’s education.
When you invest, you’re not merely saving; you’re growing your money. And when it comes to saving for your child’s education, this growth can make a big difference. This difference becomes even more significant when you start early, thanks to the magic of compound interest.
When you invest your money, you earn interest on the amount you’ve invested, and then you earn interest on that interest. Over time, this compounding effect can help your savings grow exponentially, making your child’s education fund robust and capable of handling future expenses.
Investing in your child’s education is a comprehensive process that involves understanding costs, setting a goal, and making regular contributions towards that goal. It’s an investment in their future — and there’s no better investment than that.
So, take that first step towards securing your child’s future. To get started on your child’s education savings plan, check out our Calculator today. It’s time to launch lifelong learning for your child, and there’s no better time to start than now.