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Saving Now for College Funds of your Children

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It’s natural for parents to take care or secure a good future for their children. I see a lot of pictures in social media how parents love their children by buying things for their kids, traveling, birthday celebrations, going out and a lot more. With these, responsible parents don’t think only for NOW for their children but also for their FUTURE. But in what way parents can give a good future for their children? It’s common to responsible parents to prepare their children a good education particularly college education for them to have a better opportunity in their chosen field in the future.Today, sending children to a good university is expensive, you have to consider  a lot of things like tuition fees, miscellaneous fees, food, transportation, room and board and a lot more. Without preparations, it’s impossible to send your children to a good school and when you say good school, it comes with an expensive price. These are the top 10 most expensive colleges and universities in the Philippines.

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If you are a parent and you think that you will prepare for your kids’ college education later  and  you keep on delaying, you will definitely be cramming and it will be burdensome to you financially.

Let’s say the Total Tuition Fees in Ateneo De Manila 5 years from now until the child graduates is Ph 1,345,387.85.

2016 Annual Tuition Fee is Ph180,000.00

Ateneo de Manila2

*Average of 10% increase of tuition fees per year.

So, for a 4-year course you need to come up with this amount on the 5th year which is Ph 1,345,387.85.

How much you should save? 5 years from now?

5 years to save

But what if you have 17 years to prepare the amount of a 4-year course if  you prepared earlier for the target amount of           Ph 1,345,387.85 in the year 2021 and you put it in a Savings Plan that can give 10% annual returns. You only need to save Ph45,000.00 per year or Ph3,750.00 per month only for 10 years which it can give you an amount of Ph1,397,588.93 which is more than the target amount. See illustration below:

 

Year Age Rate Invested (Payment) Cumulative Payments Interest Cumulative Interest Balance
0
1 2 10.00% 45,000.00 45,000.00 0.00 0.00 45,000.00
2 3 10.00% 45,000.00 90,000.00 4,500.00 4,500.00 94,500.00
3 4 10.00% 45,000.00 135,000.00 9,450.00 13,950.00 148,950.00
4 5 10.00% 45,000.00 180,000.00 14,895.00 28,845.00 208,845.00
5 6 10.00% 45,000.00 225,000.00 20,884.50 49,729.50 274,729.50
6 7 10.00% 45,000.00 270,000.00 27,472.95 77,202.45 347,202.45
7 8 10.00% 45,000.00 315,000.00 34,720.25 111,922.70 426,922.70
8 9 10.00% 45,000.00 360,000.00 42,692.27 154,614.96 514,614.96
9 10 10.00% 45,000.00 405,000.00 51,461.50 206,076.46 611,076.46
10 11 10.00% 45,000.00 450,000.00 61,107.65 267,184.11 717,184.11
11 12 10.00% 0.00 450,000.00 71,718.41 338,902.52 788,902.52
12 13 10.00% 0.00 450,000.00 78,890.25 417,792.77 867,792.77
13 14 10.00% 0.00 450,000.00 86,779.28 504,572.05 954,572.05
14 15 10.00% 0.00 450,000.00 95,457.20 600,029.25 1,050,029.25
15 16 10.00% 0.00 450,000.00 105,002.93 705,032.18 1,155,032.18
16 17 10.00% 0.00 450,000.00 115,503.22 820,535.39 1,270,535.39
17 18 10.00% 0.00 450,000.00 127,053.54 947,588.93 1,397,588.93

You will only save Ph 45,000 every year for 10 years and you will have a peace of mind that your child will have a  tuition fee fund that you can use to finish his college education.

Now what if you put your savings to a bank that gives 1% per year. Your money will be only Ph 505,283.29.00  on the 17th year. It will not reach your target amount of Ph 1,345,387.85.

Year Age Invested (Payment) Cumulative Payments Interest Cumulative Interest Bank Interest
1.00%
0 0.00 0.00 0.00 0.00
1 2 45,000.00 45,000.00 0.00 0.00 45,000.00
2 3 45,000.00 90,000.00 4,500.00 4,500.00 90,900.00
3 4 45,000.00 135,000.00 9,450.00 13,950.00 136,809.00
4 5 45,000.00 180,000.00 14,895.00 28,845.00 183,177.09
5 6 45,000.00 225,000.00 20,884.50 49,729.50 230,008.86
6 7 45,000.00 270,000.00 27,472.95 77,202.45 277,308.95
7 8 45,000.00 315,000.00 34,720.25 111,922.70 325,082.04
8 9 45,000.00 360,000.00 42,692.27 154,614.96 373,332.86
9 10 45,000.00 405,000.00 51,461.50 206,076.46 422,066.19
10 11 45,000.00 450,000.00 61,107.65 267,184.11 471,286.85
11 12 0.00 450,000.00 71,718.41 338,902.52 475,999.72
12 13 0.00 450,000.00 78,890.25 417,792.77 480,759.72
13 14 0.00 450,000.00 86,779.28 504,572.05 485,567.31
14 15 0.00 450,000.00 95,457.20 600,029.25 490,422.99
15 16 0.00 450,000.00 105,002.93 705,032.18 495,327.22
16 17 0.00 450,000.00 115,503.22 820,535.39 500,280.49
17 18 0.00 450,000.00 127,053.54 947,588.93 505,283.29

Now what does this mean? You could have started yesterday than later. The earlier you prepare the more time you can prepare better for your child’s education rather than preparing late. You also have to choose the correct savings plan where your money can grow faster than the banks give otherwise you will not reach the target amount you need for your child’s education. These computations are based on tuition fees only, other fees like transportation, food, clothing, miscellaneous fees and a lot more are not included yet. You can imagine that how big is the responsibility for funding your children’s education. The earlier you prepare and save big, you will have the advantage of time and interest to prepare for your college fund needs.

With these,in Insular Life, you can create a disciplined savings plan that you can start for your money to grow through Insular Life’s Wealth Secure/Assure Education that the amount you need can be withdrawn every year when your child enters college but the funds will still keep on growing even after your child graduated.

Delaying your Financial Plan to prepare for your child’s education means depriving your child to study in a good school that your child deserves. It is better to have options in the future rather than no options for your child’s education. What if your child wants to study in an exclusive school but you did not prepare financially? Would you not feel bad about it? Worst is, what if you cannot send your child to college?

In this regard,we have a flexible savings plan that you can start rather than doing nothing at all for your children’s education. If you want to know more how these savings plans of Insular Life can help you to prepare for your children’s education, you can leave a comment below or reach me for me to create savings plan that is fit to your needs.

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For more details, reach me and let’s create a disciplined saving plans for you.

 

Archie M. Yuki

Financial Adviser

The Insular Life Assurance Ltd., Co.

Mobile Number: 0917-5769607 or 0923-4941362

Email Address: archieyuki30@gmail.com

 

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