2 Smart Financial Strategies Every Parent Should Consider Before Their Child Studies Abroad
When parents dream of their kids studying at top foreign universities, the thrill of all these global opportunities overpowers the cost factor ahead. However, if they start planning their finances well in advance, what appears to be impossible actually becomes possible.
Most families just think of last-minute student loans or scrambling to find scholarships, but the best stories of foreign education start with some smart planning well before the deadlines for applications. Here are three sensible financial plans that can make your child’s dream of studying abroad both affordable and stress-free.
Start with Government-Enhanced Education Savings Plans
The core of any savvy international education funding plan must be a government-registered education savings plan that compounds your contributions with both investment returns and outright government matching contributions. In Canada, for instance, parents who are familiar with how such a plan works find they can fund a large part of international education expenses without going into debt.
The strength of these plans is the combination of tax-free growth and government contributions that nearly guarantee a return on your investment. The government will generally match a percentage of your contributions up to certain annual caps, so you’re ahead of the game from the beginning before any investment gains are realized. For families making plans for international education, this is especially valuable because these funds can be used at participating schools around the world, not limited to the home country.
You can’t emphasize enough the role of timing here. If you begin saving for your child when they’re young, you pretty much get to use compound growth to your advantage and maximize those government matching funds for as long as possible
Just think about options like the CST Advantage Plan; they’re designed to allow you to save your money over time and have the money there when your child reaches university. It’s such a relief to have a good portion of those education expenses already covered so families can focus on other elements of planning for international education rather than stressing about tuition fees.
Build a Comprehensive Currency and Cost Buffer Strategy
Smart families incorporate currency buffers into plans right from the beginning. This involves saving not only for today’s published rates, but also for education price inflation and future currency fluctuations.
Creating this buffer involves a few realistic steps. For instance, don’t just learn the current cost of studies and places your child is interested in, but be sure to study past cost trends. If you or your child has a preference for particular places to study, consider diversifying your savings in other currencies.Some schools abroad have programs where you pay tuition fees while utilizing favorable exchange rates.
Similarly, some offer a reduction if you pay the entire year at once. Being aware of such programs well ahead of time allows you to organize your savings to obtain the most favorable terms of payment.
Endnote
International education is one of the best investments you can make in your child’s future, but it’s vital to apply the same level of strategic planning you would to any other big life goal. With planning and the right blend of these tactics, what appears to be an insurmountable hurdle doesn’t just become possible but turns into something to be proud of knowing your child’s future is secured.
