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Putting a child through college is a life feat we're willing to face head on! Source of photo: alabama.gov[/caption]So this early, i have started to stash part of my meager salary to start saving for baby's college fund! Starting to save for the future (for me, that's 15 years years from now), will give me more headroom to gather my nerves in facing the daunting task of investing in education.
I've also contacted Leah Angela Limon-Mendania, a financial advisor, to guide me in financing this life goal! According to her saving for baby's education can never be too early. "With tuition fees increasing every year coupled with the rising cost of goods and services, nothing could be wiser but to keep up and start saving", Leah explains. She also shared are some helpful points to guide us in drafting a savings plan solely for your child's college:
Start as early as you can.
The earlier you start saving, the less will be the amount you need to save regularly. For example, you need 500,000 for your baby's college education when he/she is about 19 years old. If you start saving while your child is still a baby, you need to save about Php 930 monthly. As opposed to when you start saving when your child is about 7, then you will need to save about Php 2,030 monthly.
Save as much and as regular as you can.
The more you save now, the more interest you will earn and the more money will be compounded through the years. For example, saving Php 500 monthly for 19 years will yield Php 268,572 if your investment earns 8% interest. While saving Php 1,000 monthly for 19 years will yield 537,144 at 8% interest.
Choose the appropriate investment vehicle to save your money in.
In determining the appropriate financial product to invest in, think about your purpose. If your saving for something that you need within a year or two, then your only investing for the short-term so a financial product with guaranteed returns is more appropriate like a savings account. On the other hand, if you're saving for something you need in three or more years, then you may choose more aggressive financial products which will give higher but not guaranteed returns like unit investment trust funds, mutual funds and even variable universal life insurance.
Choose the right company where you will invest your money.
In choosing the right company, credit worthiness is a primary consideration. You may check a financial institution's credit rating online. The higher the rating a company has means they are more credit worthy and financially stable than those with lower ratings.
Choose a financial product which will give you higher returns.
The higher the interest rate that your money will earn, the less money you will need to save and the shorter the time frame will be towards achieving your goal. Each company's investment performance record is always available for the client's reference. However, please take note that this consideration is only secondary to choosing the right company.
Leah Angela Limon-Mendania is a Certified Public Accountant by profession. She worked for an auditing firm for 4 years. She works as a financial advisor and shares her shares her knowledge and skills to educate Filipinos financially. Her passion for food and desserts in particular led her to put up her own cakes and pastries business, she's now currently supplying to a concessionaire of a hotel in Manila.
Here are Leah's contact details if you want to learn more about personal finance. Email: lavlimon@yahoo.com Mobile: 0917-8605059 Landline (duo): 975-4992
