Planning for your child’s education

By Finbar Garcia

LUTCF, FSS, MFA

Happy Easter! Have you ever considered the cost of education—from primary to tertiary level? Raising children in today’s environment is no easy task. Many couples now limit the number of children they have, and in some cases, may even decide not to have any. There are many reasons for these decisions, however, I want to focus on the cost of education.

Back in the day, as children going to school, life seemed much simpler. Of course, we were not exposed to our parent’s financial situation, so we were grateful for what we received.

Today, however, the ever-rising cost of goods and services could be one of the reasons families may be smaller than in years past.

Because our education system is heavily influenced by the British model, there are five main levels of education:

1. Early Childhood Care and Education (pre-school ages 3–4)
2. Primary Level (ages 5–11)
3. Secondary Level (ages 12–19, including lower & upper Six)
4. Post-Secondary Level (technical/vocational)
5. Tertiary Level (university, local or abroad)

Primary and Secondary education are free and compulsory from ages 5 to 16, culminating in academic Caribbean Secondary Education Certificate (CSEC) examinations, or up to age 19 with the Caribbean Advanced Proficiency Examination (CAPE). But what happens before and after these stages?

While pre-school is not mandatory, it provides the foundation for a child’s development. The establishment of the Early Childhood Care and Education (ECCE) centres throughout the country, that cater for free education is a step in the right direction. These centres help children develop early educational skills for entry into primary school. Though these educational centres are funded by the Ministry of Education, many parents opt for private institutions where costs can be significant.

These institutions offer optional activities such as swimming, football and other developmental programmes. Fees can range from approximately $650 to over $1750 per month, with an average of about $1,200 monthly. Over two years, this can amount to about $35,000 per child, requiring careful budgeting along other household expenses.

After secondary level, if a child wishes to attend university, this is where the big money is spent. What you need is a plan, how to acquire the university funds by the time the child is ready.

Using institutions like The University of the West Indies (UWI) as a guide, for estimated costs and all other expenses such as housing, books, stationery, transportation and personal needs. However, calculating the actual funds of a university education will require professional advice. There are two ways to prepare for these expenses:

(a) Decide on the current cost of a desired degree that your child wants to pursue and consult a professional financial adviser to calculate its future value both from a local and foreign university. Based on this, the adviser can recommend how much to invest and which markets to meet that desired goal

(b) The second way is having an endowment policy early, ideally when the child is still in pre-school. This type of investment allows parents to build a fund over 15–20 years. The fund is guaranteed until it matures. For example, Richard wants $500,000 TTD in 20 years for his child’s university degree programme. He will need to take out an endowment policy for that amount or, where possible, a USD policy. If the parent passes away during the policy period, the child is still covered. If the parent lives for the 20 years, the entire cash values (savings) will equal the sum assured, providing the necessary funds for education.

The key to funding your child’s education is starting early. Always remember: You can invest and earn interest…or borrow and pay interest. The choice is always yours.

While some persons wait and hope for a scholarship, it’s not good practice to depend on the state for funding, especially in today’s economy.

Call me for more information on planning your financial future. Send your questions to myfinancialadvisor2020@gmail.com or call 620-1185.