Are Malaysian parents saving enough for their children's education?

Melanie Chalil
A basic accounting degree today costs RM52,200. In 20 years’ time plus inflation, that figure will be RM114,376. — Picture from Unsplash

PETALING JAYA, October 10 — It is often said that education is an investment.

But are Malaysian parents prepared for the financial commitment ahead?

A HSBC survey conducted last year discovered that Malaysian mums and dads forked out an average of US$5,606 (RM23,228) for a typical course of three years.

That’s not all.

Add in accommodation, bills, lifestyle expenses and tuition fees, and the figure goes up to US$10,118 (RM41,923).

When anticipating the cost of education, there is also inflation to take into consideration which many tend to overlook.

At present a basic accounting and finance degree offered at Malaysian universities cost between RM52,200 and RM99,900.

With an inflation rate of 4 per cent, that figure in 20 years will be between RM114,376 and RM218,893.

It paints a realistic picture of what to expect in the coming years for parents who want to put their children through university.

It comes as no surprise then that many parents wish they were more financially prepared for their children’s university education, according to the HSBC survey.

The survey also found that 49 per cent of parents with a child at university are worried they lack the financial resources to support them while 49 per cent wish they had started saving earlier.

It’s also important to factor in what the average Malaysian earns compared to the cost of a degree.

According to a household income survey conducted by the Department of Statistics Malaysia, the median monthly household income in 2016 was RM5,228 whereas in 2014 the average was RM4,585.

With rising cost of living and stagnant wages, it’s easy to see why parents worry about the cost of the children’s tertiary education.

Smart ways to save for your kid’s education

49 per cent of parents wish they had started saving earlier. — Picture from Pexels

Plan as early as possible

Planning your finances early in life can go a long way to help curb financial strain in the future when you have to cough up a huge sum of tuition fees for your child’s education.

It won’t hurt to consult with a financial planner who has the knowledge on helping you to be money-aware and the best way to save up.

Be sure to also teach your kids about the importance of saving to help them live within their means when they eventually go to university.

Consider getting education insurance

There are many education policies by insurance companies out there to help hopeful parents realise their child’s educational dreams.

Many of these plans combine savings and an investment feature but the key is to find a policy that is realistic for your financial capacity to avoid dipping into your own savings and retirement fund which many parents find themselves doing.

Unit trust funds and Fixed Deposits

Another way to grow your money is investing in unit trust funds that offer higher returns depending on market performance that can go into paying for your child’s education.

Or if you have a large sum to park in a bank account, one option is to put it into a Fixed Deposit (FD) account and leave it to accumulate over the years.

National Education Savings Scheme (SSPN)

Introduced by the Malaysian government via the National Higher Education Fund Corporation (PTPTN), SSPN offers many benefits including tax relief of up to RM8,000, Takaful coverage and has competitive dividend.

Another reason to open an SSPN-i Plus and SSPN-i account?

The draw is back this year with loads of exciting prizes to be won.

The draw is open to new and existing SSPN-i Plus and SSPN-i account holders. — Image courtesy of PTPTN

New and existing SSPN-i and SSPN-i Plus account holders can stand a chance to win prizes worth up to RM1.1 million from now until December 2019.

For Cabutan WOW! SSPN-i Plus, the number of draws is based on every RM50 deposited and there are no limits to the number of draws. SSPN-i Plus account holders only have to make sure they don’t have any overdue payments pending to participate in the draw.

For SSPN-i account holders, the Cabutan 15 Tahun SSPN-i is based on each net deposit of RM100 which is calculated as one draw and depositors only need to make additional savings during the promotion period to qualify.

Find out more here.

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