How much should I save?
You may want to put aside as much money as possible in your children’s education fund. The more money you put aside now, the less you or your child will need to borrow later. In many cases, the amount of money you should contribute really boils down to how much you can afford. Every situation is different. You will need to take a detailed look at your family’s finances in order to determine what you can afford to add to your child’s education fund each month. To increase the amount of money that you are able to save, consider these options:
- Cut back on non-essential spending/expenses (e.g. eat out less often),
Start a savings program as early as possible
Perhaps the most difficult time to start a college savings program is when your child is young. Yet this is the time when you should start saving. With many years to go until your child starts university, you have time to select investments that have the potential to outpace university costs increase (bearing in mind that those investments that offer higher potential returns may involve greater risk of loss). In addition, you benefit from compounding, which is the process of earning additional funds on the interest and/or capital gains that your investment earns along the way. With regular investments spread over many years, you will be surprised at how much you may be able to accumulate in your child’s college fund.
You should not feel bad if you cannot put aside a huge amount a month from the start. Start with a small amount and add to it whenever you can. You will have a head start as well as peace of mind knowing you are doing the best you can.
Benefits of having an education fund in place
While the benefits are obviously more, we have outlined just a few:
Education Trust Plan enables you to take care of the future of your children by giving them a platform to compete positively with their peers. Besides, there is a common saying that there is no end to learning, therefore parents or guardians are not excluded from benefitting from an Education Trust Plan.
In the event of death, the fund does not form part of your estate for the purpose of probate thereby ensuring that your objective(s) are fulfilled timely. This is however not to say that Education Trust Plan cannot take effect during your lifetime as this is dependent on your wishes.
For a thorough and seamless Education Trust Plan, you will need an expert like First Trustees Nigeria Limited to put you through.