Is Your Child Three Years Old? It’s Never Too Early to Start Education Planning

By Rohit Singh

The age of three is a magical, whirlwind period. Your house is likely filled with the sounds of newfound vocabulary, the occasional thud of a falling block tower, and the boundless energy of a toddler discovering their independence. At this stage, “university” feels like a lifetime away. You are likely more concerned with finding the right preschool or wondering when they will finally sleep through the night.

However, time has a peculiar way of accelerating once children enter the picture. While your child is currently mastering the art of sharing toys, the financial reality of their future is already beginning to take shape. Starting the conversation about education planning now is not about rushing their childhood; it is about ensuring that when they are eighteen and ready to take on the world, the only thing they have to worry about is their grades, not the price tag attached to their dreams.

The True Cost of Ambition

It is easy to underestimate the sheer scale of tertiary education costs. Whether you envision your child attending a local institution or venturing abroad to the UK, Australia, or the US, inflation plays a significant role. Education inflation often outpaces general consumer price inflation. This means that a degree that costs a certain amount today could potentially double in price by the time your three year old is ready to enrol.

Beyond just tuition fees, parents must consider the “hidden” costs of higher education. These include:

• Accommodation and halls of residence
• International travel and visas
• Daily living expenses and textbooks
• Currency fluctuations if studying overseas
  

When you look at the total sum required, it can feel overwhelming. But the greatest asset you have right now is not necessarily a high income; it is time. By starting when your child is only three, you have a fifteen-year runway to build a robust financial foundation.

Why Starting Early Changes the Mathematics

The primary reason to begin at age three is the power of compounding. When you invest or save over a long horizon, you are not just putting money aside; you are allowing that money to generate its own earnings, which then generate further earnings.

If you wait until your child is ten or twelve to start, the monthly amount you would need to set aside to reach the same goal becomes significantly higher. Starting early allows for a more sustainable approach to your household budget. It means you can contribute smaller, more manageable amounts without compromising your current quality of life.

Furthermore, a longer timeframe provides a buffer against market volatility. If you have fifteen years, you can afford to weather the natural ups and downs of the economy. You have the flexibility to take on a more diversified investment approach, which can potentially offer better growth than a standard savings account.

Navigating the Financial Landscape

Building an education fund is rarely as simple as putting money into a jar. It requires a thoughtful, structured approach. Many parents begin by evaluating their current surplus income and determining how much they can realistically commit to a long-term goal without impacting their emergency funds or their own retirement preparations.

The Role of Disciplined Savings

One of the most effective ways to build a pot of gold is through consistency. Automated contributions to a dedicated education fund ensure that the “future you” is taken care of before the “present you” finds something else to spend the money on. This disciplined approach removes the emotional friction of deciding whether to save each month.

Investment Portfolios and Risk

Parents can consider various investment vehicles to outpace inflation. A well-balanced portfolio might include a mix of equities and fixed income assets. Since your child is only three, you might have a higher tolerance for risk in the early years, gradually shifting toward more conservative, capital preserving assets as the university start date approaches.

Insurance-based Planning

Insurance can play a vital role in education planning, providing a safety net that ensures your child’s education is funded even if the unthinkable happens. Certain policies are specifically designed to mature just as the first tuition bill arrives, providing a guaranteed sum that offers peace of mind.

Our Approach to Your Family’s Journey

We work with many expatriate families navigating these challenges. These families often face additional layers of complexity, such as moving between tax jurisdictions or needing to fund education in a currency different from the one they currently earn.

Our process starts with a detailed analysis of your current financial situation and long-term goals. We take into account investment portfolios, expected education timelines, currency exposure, and your retirement needs. It is vital to remember that while your child can get a loan for education, you cannot get a loan for your retirement. Therefore, any education plan must exist in harmony with your overall financial health.

From there, we build a personalised, flexible plan tailored to your family’s unique journey. This may include a mix of disciplined savings, structured investment portfolios, and insurance-based planning. This will be reviewed and adjusted quarterly to ensure everything stays on track, even as life changes. This iterative process allows us to pivot if your child expresses a desire for an expensive medical degree or if your career takes you to a new country.

Four Practical Steps to Take Today

If you are ready to move from “thinking about it” to “doing something about it,” here is a roadmap to get started:

1. Define the Target: Research the current costs of the types of universities you might consider. Factor in a 3% to 5% annual increase for inflation to estimate the future cost.
2. Audit Your Assets: Look at what you have already. This might include government grants, existing savings, or gifts from grandparents.
3. Identify the Gap: Subtract your existing assets from the projected future cost. This “gap” is what your new plan needs to fill.
4. Seek Professional Guidance: Because everyone’s tax situation and risk appetite are different, speaking with a professional can help you avoid common pitfalls, such as over concentration in one asset class or ignoring the impact of fees.

The Gift of Choice

Ultimately, starting education planning when your child is three is one of the greatest gifts you can give them. It is the gift of choice. It means they won’t have to turn down a dream school because the finances don’t add up.

By taking small, deliberate steps today, you are turning a distant, daunting expense into an achievable, organised milestone.

By planning now, you ensure that when that day comes, you are ready to stand beside them, confident and prepared.

When you are ready, you are welcome to book an initial conversation with me to explore tailored education planning options best suited for your child’s future.

Rohit Singh has been with GFC for nearly 9 years and has established himself as one of our top performing consultants. He specialises in holistic financial planning for individuals living in Singapore.

Rohit is an authorized representative of Global Financial Consultants Pte Ltd- MAS License No- FA100035-3.

To learn more about how he may be able to help you, please contact him:

Phone number: +65 85015002
Email address: rohit.singh@admin.gfcadvice.com
LinkedIn page: https://www.linkedin.com/in/rohit-singh-9b56b0124/

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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.

*Please note that Rohit Singh is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.