Dubai - More than half of UAE parents say they wish they started saving earlier for their child's education.
Published: Mon 2 Oct 2017, 12:26 PM
Last updated: Mon 2 Oct 2017, 10:38 PM
Despite parents in the UAE being the second highest spenders globally when it comes to their child's education, only 17 per cent have specific education savings or investment plans in place. And 53 per cent say they wish they started saving earlier - both factors, which prove that early financial planning (as far as education is concerned) is a grey area for many parents.
New research from HSBC's annual global report 'Value of Education 2017: higher and higher', shows that parents here are paying on average Dh365,000 for their child's lifetime education costs.
Practical advice for parents:
Start planning early - Early planning and saving for education (from when the child is born) can help your children fulfill their potential. It will also limit the strain on family finances.
Be realistic about the costs - The costs of educating your children from school to university can be very expensive. Be sure to allocate enough money to support their development and attainment through all stages of their education.
Considering university abroad? - A university education abroad can help children to be more independent, but make sure to plan for all the implications including higher tuition fees, intermittent travel, and exchange rates.
Prepare for the long-term - Parents are often still paying for their children's education way into their twenties. Understand the extra costs of them studying for longer and consider putting plans in place to help fund these, should the unexpected happen. Seeking financial help could be an option.
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But according to Gifford Nakajima, Head of Regional Wealth Development, HSBC, Mena, some parents are paying "considerably more" than this, given the broad spectrum of schools and curriculums on offer across the UAE's private education sector.
According to a report by online education guide Edarabia earlier this year, school tuition fees alone in Dubai can range from between Dh2,479 to Dh120,145 per annum.
Despite these high costs, 500 participants surveyed here as part of HSBC's latest global report (which surveyed more than 8,400 parents across 15 countries), said education remains a "top priority" for their child/children. So much so they are willing to make personal sacrifices to save on cash.
Twenty five per cent said they would cut out holidays, 28 per cent said they would be willing to change working styles, and 25 per cent said they would consider developing less expensive social circles in order to put money away for their child's future.
Rather alarmingly however, the report did highlight a lack of early financial planning on the parents' part. 68 per cent of those surveyed admitted to funding their child's education from day-to-day income, and 34 per cent said they dipped into their general savings to help fund the costs.
Additionally, of the 65 per cent of parents who said they would consider university abroad for their child, 34 per cent said they do not know how much it would cost them.
According to the report, the UAE comes second to Hong Kong as far as tuition costs go, with $28,014 being spent on primary school, $34,530 on secondary school and $36,834 on tertiary education.
However, it is worth noting that all fees are based on an average, after parents were asked approximately how much they currently contribute each year to their child's primary, secondary and tertiary education.
Speaking at a roundtable discussion on Monday, Kunal Malani, Regional Head of Customer Value Management, Retail Banking and Wealth Management, HSBC, said the Dh365,000 education price tag in the UAE is more than double the global average. But there is a warranted reason for this.
"The quality of public education in some countries like the UK changes its overall average because it is free of cost. What you will notice about the top three countries (Hong Kong, UAE and Singapore), is that they are similar in the fact that they have a big focus on technology as well as a vast expatriate population."
So for parents in the UAE who pay among the most in the world for education, "planning to save as much as possible as early as possible is a critical part of being prepared", he said.
As well as tuition, budget 15-20 per cent of savings for additional costs
Atik Munshi, Managing Partner at Horwath Mak told Khaleej Times that parents "need to keep in mind and budget education costs" based on: the Emirate in which they are living; the curriculum they choose (UK, French, US, Indian, etc); and the number of children they have, as well as their age.
"Schooling alone is a repetitive cost, which occurs every year and will last for nearly one and a half decades for most parents. The more children, the higher the costs; and the higher the age of the child, the higher the school expense."
Apart from the normal tuition fees, parents need to set aside an additional 15-20 per cent for things like uniform, bus fees, books, trips, and extra-curricular activities.
"Parents in the UAE, particularly expatriates, should consider two major costs of living: one being the rent and the other, school fees. Parents with more children may choose to live in the northern emirates where rent costs are less, hence the extra savings can help budget towards the child's school fees."
Kelly@khaleejtimes.com
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