It is always better to plan your children's education expenses earlier

In Taiwan, most families spent 25% of their daily expenses on children's education, it is not a small amount. However, not too many parents willing to carefully estimate the educational cost for their children at different stages. Most of them are still keeping the concept "can be handle when happened". It turns out the income level of the family usually determines the quality of their children's education. Further more, it is most unfortunate to affect children's education opportunity if there is something bad happened to family regular income (such as unemployment and others).
　The increase of the education cost in Taiwan is particularly noticeable. The estimated average education cost for a child from kindergarten to university exceeds one million dollars. The Minister of Education has followed a 8% and 3% of annual growth rate on the tuition and the other miscellaneous expense respectively during the years. Due to the high education cost, we recommend an earlier stage of a financial plan should be designed for the family to fulfill their different education needs.

How much should be prepared for your children ?

To estimate the educational fee for your child is the first step to build up a well educational planning. From playgroup, kindergarten, primary school, secondary school to university, how much should be prepared for a children educational fee? Generally, we divide educational fund into three parts: 1) Cost of living: expenditure of daily living. 2) Educational fee: The academic fee from kindergarten to high school. 3) College/university and graduate educational fee: From undergraduate to postgraduate educational fee, or study abroad. The kindergarten and university are the highest expenditure period among the different education stage in Taiwan.
　The pre school educational fee includes a playgroup fee around 20 to 30 thousands per month, plus a public and private kindergarten fee about 20 thousands and 60 thousands per semester respectively. It definitely is not a small amount for the family just got married and would like to have children immediately. Due to the size of the pre school expense, this should be included into one of your major items of family’s daily expenses item. Meanwhile, we recommend any savings for future education fund should choose a low to moderate risk investment vehicle.

Low burden from elementary to high school, well prepare for advanced education.

The public grade school (from elementary to high school) education are the comparative lower burden stages than pre-school education. This is a good period for parents to prepare the university educational fee. Generally, it costs around 60 thousand for public college / university and 120 thousands for private school study each year.
　After the college education, the graduate study may cost you another 60 thousand per year for a local school and up to 1.5 million each year for studying abroad. You must prepare this in advance.

Build up a long term education fund plan by suitable investment tool

As showed in above, the educational fee of a child from kindergarten to postgraduate degree needs around 2 to 4 million dollars, It is no doubt a quite heavy burden for an average family with kids. Hence, a long term education fund planning is necessary in early stage.
　Safety, liquidity and anti-inflation are the three major investment considerations.
　The main characteristic of education fund is predictable in amount and payment period. Due to the long term nature of the fund, wider investment latitude is justified. The major investment considerations of an education fund are safety, liquidity and anti-inflation. Educational fee is the necessary expenditure for those families has kid, so low risk investment is the first consideration. The second investment consideration is anti-inflation due to the yearly increased tuition fee. And lastly, the educational fee expenditure is fixed in periodic, so the investment plan must have liquidity to ensure the fee is paid on time.

Three points for capital accumulation (education fund growth)

Three points should be aware in the process of capital accumulation (education fund growth)
　I) In the initiate period, an aggressive investment with high return vehicle should be considered. Education fund is a long term capital accumulation in nature and normally needed 10 years or above from now. Hence it is not affected by short term return volatility. Some potential growth stock or fund is the suitable choices.
　II) Education fund is a long term investment of children’s academic payment. Hence, the capital guarantee is another important consideration. The investment tool which has fix interest return like time deposit or bond is the suitable choices.
　III) While the time is close to the need of education fund payment, the investment mix should be readjusted to reflect more conservative and high liquidity needs.