With the erratic economic status of our country, parents sometimes find themselves falling financially short when the dreaded need for college tuition comes because it’s not easy to save enough money for your child’s education. Most average-earning parents are trapped in this kind of situation: despite all their efforts to save, nothing ever seems enough for their children’s needs, especially given the rate of inflation and the higher cost of living these days.
Most financial strategists believe in the power of investing, which involves growing whatever savings you have on hand through profitable investments that can help you build enough of a nest egg so that you won’t be struggling to make ends meet. But while investing is an instant lure to those who seek financial freedom, you shouldn’t dive into making investments willy-nilly; you need to find out what works best for your purpose. So what vehicles can you consider to enable you to pay for your child’s education?
FN provides you with six tips to help you do just that. Click on the tips below to see more details, or simply keep on reading.
Tips for Earning Money for Your Child's College Education:
- Start early.
- Make sure your savings program is reliable.
- Get insurance or educational plans.
- Capitalize in varied funds.
- Invest in yourself and your own business.
- Engage in real estate.
(Photo source: sxc.hu)
Many parents attest to the importance and efficiency of banking for college funds. But you shouldn’t wait until your child is looking at college brochures or studying for entrance tests to start saving. You can save more by starting as early as possible and discovering which banks provide the highest benefits and interest rates.
You can opt to open a savings account for regular deposits and earn a humble interest from it, or you can lock your money into a time-deposit account and acquire a better interest over a particular period.
Take, for instance, Bank of the Philippine Island’s Maxi-Saver Savings with ATM or Passbook, which allows you to deposit as low as P25,000 and earns an interest of 1.375 precent and up per annum, aside from the 1 percent bonus interest rate per annum, which applies if you don’t withdraw in a month. For a time deposit account, BPI offers a minimum of 2.250 percent interest in 364 days that may reach up to 3.5 percent, depending on the deposited amount.
Both types of accounts are good forms of safekeeping, but you should always look for a bank that gives the highest interest rate and is, stable and dependable. You may choose to get stocks too, but this presents an element of risk that is almost completely absent in simply banking your money.
MAKE SURE YOUR SAVINGS PROGRAM IS RELIABLE
PAG-IBIG is another form of banking that may be more reasonable to other parents who are working in government or private companies. It offers a program called Provident Savings Program, which is geared toward savings generation and provision of inexpensive housing finance. The program provides benefits, such as the opportunity to double or triple your savings and receive tax-free, annual dividend earnings.
GET INSURANCE OR EDUCATIONAL PLANS
With the losses incurred by investors of CAP and other insurance plans that soon followed, we can understand why a lot of people have been burned by this method; however, there are still insurance companies you can really trust to provide you with the financial security you may need in the future.
To be fair, though, some education plans are still worth the investment. One example is Philam Life’s Brilliance education plan, which primarily seeks to support your child’s education in high school and college and even offers security after graduation. The plan provides guaranteed annual increase in cash benefits, life protection benefit for your child, extra earnings through dividends, and more. In case of your permanent disability or death, your child can still avail of a contingent fund every semester for his education, not to forget that premiums can be waived as well.
CAPITALIZE IN VARIED FUNDS
Invest in funds like unit investment trust funds, mutual funds, corporate bonds, or stocks to grow your wealth. Some mutual funds focus on college-tuition savings without the need to invest big amounts monthly, which will best suit your purposes. You may want to invest in corporate bonds or individual stocks as well.
The “Primer on Savings and Investments in the Philippines” by USAID, EPRA, and Ateneo de Manila University is a great tool for understanding the basics about these types of investment. You’ll learn everything, from frequently used finance jargon to the ins and outs of various types of investment. It’s also a good idea to invest in educating yourself about earning more money by attending conferences and seminars like the upcoming Money Summit & Wealth Expo, or reading up on the local market.
(Photo source: sxc.hu)
INVEST IN YOURSELF AND YOUR OWN BUSINESS
Investing your money in a good business is also profitable, says Engr. Villanueva, a real estate investor and developer who is also the owner of Feel Good Spa and Salon in San Fernando City, La Union. Within only four months of operation, he was able to see the return of his investments from the spa and salon business. The good thing about investing in business is flexibility of revenue, especially if the business is running well.
Going into business lets you be your own boss, set your own hours, and keep the profits for yourself and your partners, but it’s risky as well. In any business endeavor or investment, there are always the threats of loss, bankruptcy, theft, and other negative, natural forces that may hamper the growth of your investments. The good thing about it is that you have the possibility of maximizing earnings, if the business does well.
But if it doesn’t, you may risk losing it all. So before putting all your earnings in a business, study the concept of your business and do your research first to find out if that kind of business is indeed profitable. If you’re going to invest in someone else’s business, you may also need to ask yourself how much you trust your potential partner, how professional he or she is, and how viable his or her plans are. If you’re investing in your own business, make sure you have what it takes to set it up and see it through. Either way, study the market and do your homework; you want to know it’s as close to a sure thing as possible before putting your money where your mouth is.
ENGAGE IN REAL ESTATE
It’s a tale as old as time: real estate is one of the most common and oldest forms of investments. The truth is that real estate offers diverse profiteering methods, such as buying and selling of land properties, leasing, or development. Some, however, find it difficult to understand the profiteering method when dealing with property.
According to Engr. Villanueva, “Real estate is a tricky investment, but with perfect timing, a reasonable price, and a good location that becomes strategic in the future, it becomes otherwise.”
The real trick in real estate investment, he says, is acquiring foreclosed properties from banks that are sold at low prices and maximizing their potential through different income-generating strategies. For instance, if the foreclosed property is a townhouse, you can have it rented or offer it as rent to own for a certain period. From these foreclosed properties comes the opportunity to earn from your investment. Nevertheless, there is the risk of inflation or devaluation of peso that may affect the value of your property. Before engaging in real estate though, it’s best to attend seminars or lectures that could give you the proper perspective in maximizing the potentials of this investment type.
One final note: a good way to start is to stick to the investment that you know best and wait until you profit from it, and make sure you never invest all of your money. Once you have the initial return of investments from the first one, then perhaps you can engage again in other similar lucrative investments. Sticking to one form of profitable investment is perfectly all right, but investing and saving in different reliable money-making schemes also gives you better opportunity to amass unlimited revenues from diverse interests, thus saving more for your child’s education in the future.