20/01/2022
Education Planning
When it comes to education, parents would want to give the best for their children. When the "want" is there, it comes with a package which is "cost" and they should realize that planning as early as they could is key to realizing this dream.
So what should they plan for? Lets say best scenario where your children could complete their Diploma in 2 years & Degree in 3 years so total is 5 years. Other than tuition fees, parents should also bear in mind on living cost & other expenses.
Lets look at an example:
Diploma today RM25,000
Degree today RM42,000
Annual living cost today RM13,200 per year = RM66,000 in total
Other cost RM3,000 per year = RM15,000 in total
Total cost = RM148,000
But is the calculation accurate? Yes if your child is furthering their study TODAY and yet its not accurate still.
How much you need to save? The more money you put aside today, the lesser you or your child will need to borrow later. You should include inflation as a factor too.And to plan well you should also decide on how much of the bill you want to fund whether its 100%,75%,50% and so on.
During the observation period from 1979 to 2020, the average inflation rate was 2.9% per year, however inflation rate for education recorded average 3% per year.
So how do you calculate accurately? Example Ali have 13 years until Diploma n 15 years until Degree
Actual cost for Diploma upon registration = RM36,713.34
Actual cost for Degree upon registration = RM65,434.63
How about living cost and other expenses? Its a little different as it is affected by inflation real time per year basis.
Actual cost for Living cost + Other expenses over 5 years of enrollment = RM124,471.67
Total actual cost after inflation = RM226,619.64
Having trouble to calculate and plan properly? Feel free to contact me and i will share a simple yet powerful strategy to achieve your financial goals
