Saving for varsity starts before child turns five: Survey

Parents planning for tertiary education in the United States estimate that they will need between $150,000 and $250,000, a recent survey by Friends Provident International has found.
Parents planning for tertiary education in the United States estimate that they will need between $150,000 and $250,000, a recent survey by Friends Provident International has found.PHOTO: BLOOMBERG

That's what 73% of parents polled do; 39% expect their child to study overseas

Cash-strapped parents won't need any reminding, but plenty of people in Singapore are putting cash aside for their children's education, according to a new survey.

It found that 73 per cent of the survey respondents with children start saving for university education before the child turns five.

The Friends Provident International poll also noted that of these, 51 per cent are saving - or plan to save - so that their children can do a typical three-year undergraduate degree course, while 33 per cent want to fund a master's degree for their child.

About 12 per cent even aim to put enough money aside so a child can study for a doctorate.

Mr Chris Gill, Friends Provident International's regional general manager, said: "These findings reflected the competitiveness in the workplace, and results would be similar in other regions."

The survey found that 61 per cent plan to send their child to a university in Singapore.

Those who are saving or planning to save for a child to go to university made up 57 per cent of the 570 Singaporeans interviewed for the investor attitudes survey.

The respondents were from two groups: individuals with total investable assets of between $80,000 and $199,999, and those with assets of $200,000 to $1 million.

Total investable assets include cash, bonds and pensions but exclude Central Provident Fund (CPF) savings, homes, collectibles and consumer durables.

The survey was conducted online and over the phone last month.

Mr Gill said the survey scope was expanded to include the area of saving for a child's education, as it has constantly been among the top three reasons for Singaporeans to save. The other two reasons are funds for a rainy day and retirement.

The poll found that of the respondents aiming to save enough for a child's tertiary education, 39per cent expect their offspring to study overseas, with the United States, Australia and Britain being popular destinations.

Those planning for tertiary education in the US estimate that they will need between $150,000 and $250,000. The figure was estimated at between $120,000 and $150,000 for studies in Britain and from $150,000 to $200,000 for Australia.

Mr Gill noted that parents should take currency risks into account, saying: "Fluctuations are significant in a 20-year period, so be aware that the actual funds needed will be much higher than today.

"Even in Singapore, the cost of education is likely to rise 10 to 15 years later."

The survey also found that about 67 per cent of investors with children plan to save, or are saving, $500 to $3,000 a month for each child's tertiary education.

Mr Gill said: "The amount they are saving per month is very significant, considering that it is for only one child."

The survey also found investor sentiment about the current investment climate to be less positive compared with Hong Kong and the United Arab Emirates, where the survey was also conducted.

However, those polled were optimistic about the short term, with 52 per cent of respondents expecting to see investment markets improve over the next six months.