Ask the expert: planning for kids’ education

I have two children aged five and seven. I earn a decent salary but am nervous about the rising cost of education. What steps should I be taking now for tomorrow?

Saving for children’s education is undoubtedly important, so it is admirable you are thinking ahead.

While there are fantastic schools and universities here, it is natural for many expats to look homewards or abroad when it comes to further education. Whichever path your children take, it will undoubtedly cost you a fair amount. In addition to tuition fees, which can vary wildly depending on the country in question, there are hefty costs associated with living expenses to contend with. On average the current cost of an undergraduate programme at a reputable university comes to around $50,000 (Dh183,500) per annum. Most parents don’t want their children to work during their crucial university years, which means you will have to spend even more. What seems a lot now will be costlier in the future, due to inflation.

Setting up a specific investment fund for your child’s education can be a sound investment and yield greater returns than an average savings account. A fund also means that the money is physically and mentally separate from your everyday finances, so you are unlikely to dip into it.

Each child will need an individual fund, usually a fixed-term policy that can span from the ages of five to 18. At the end of the term, you can choose either to fund the fees, or take a lump sum, which you can use however you wish to support them.