Setting up a child education fund is not easy. Although many developed countries have provided free education to their people, Indonesia is still a country with a fairly expensive education fee.
The child education fund is often a scourge for parents because it often chokes the neck and makes toilet income. No wonder many families long ago began to think about how to finance their children to the highest education. Even thinking like this is done before the child is born or is still a toddler.
As parents and prospective parents, of course, you also think about how you can pay for your children’s schooling later. Regarding the cost of children’s schooling, of course, don’t just think about it. But you also need to have knowledge about managing money well and know ways to be able to prepare money for children’s education.
There is no need to stress at the beginning about your child’s school fees. Here are some types of financial and investment products that parents and prospective parents need to know in order to properly prepare education funds.
Saving money in the bank is one way to save money for education, which is popular among the people of Indonesia. There are lots of savings products that can be chosen and allocated specifically for children’s education costs. You can also open a regular savings account in the name of the child directly.
The key to success so that children’s education savings can meet school fees is the discipline of saving. In principle, saving must be patient and disciplined because “little by little it will become a hill”.
Remember, try to open a savings account without an ATM or debit card, so you are not tempted to take the savings before you need it.
The minus or lack of conventional savings for school fees is that your savings can be eroded by bank administration fees, cash withdrawal fees, and other costs. Not to mention, the interest rates offered are also not great.
For the short term, for example, saving school fees for less than 2 years, this conventional bank savings product is a good choice for you than saving money at home. However, for the long term, for example for college preparation (10 years – 15 years), conventional savings products are less profitable.
Understand that the type of education savings is different from savings products in general. Education savings products are generally termed savings with advantages, such as higher interest rates
interestingly, there are additional facilities such as health insurance or life insurance, to administrative costs that are smaller than the usual type of savings.
Education savings offered generally have life insurance facilities. That is, if you are gone, the target for education funds will still be achieved. In addition to life insurance facilities, these savings also have attractive interest rates and health insurance facilities with additional fees.
The consideration of parents in choosing education savings for their children’s school fees is that savings products are easier to understand, not complicated, practical, affordable savings, and savings are safe bank products.
Generally, an education savings account is often a derivative of your personal account at the same bank and the system is auto-debit. You can open an education savings account at a bank that has these facilities, bring your ID card, savings book, plus the child’s birth certificate.
An illustration, for example, you plan to save Rp. 1 million every month for savings for children’s education. Now every month the bank will automatically deduct Rp. 1 million from your personal account to be put into a child’s education savings account until the period you have determined.
Then, if you die, the bank will use life insurance to cover all unpaid savings installments.
Then, what if it turns out that you are unable to repay the savings due to economic problems? Don’t worry, usually the money you’ve paid in installments so far will go back into your main savings account. Of course, with a number of discounted fees for administration and so on.
Many think that education savings and education insurance are the same. That thought is not entirely wrong, because at first glance it is the same even though there are some significant differences.
Education insurance is a product offered by insurance companies with features of saving education funds as well as protection (health/life insurance).
Well, for you parents and prospective parents, let’s first understand the difference between education insurance and education savings:
Education insurance is issued by insurance companies, while education savings are issued by banks.
Even though the premium has been paid, education insurance can only be disbursed if it is due or you die. Meanwhile, education savings can be disbursed when you complete your savings obligations or are no longer able to pay the installments.
The discount for disbursing education insurance funds prematurely is greater than education savings. Although the benefits or returns of education insurance are greater, the process is more complicated than education savings.
As an illustration, for example, you take education insurance with a premium for 15 years assuming the insurance will be disbursed three times; that is when children graduate from elementary school, graduate from junior high school, and enter college. Well, apart from those three things, the insurance will not be disbursed, unless you die.
Saving Early is a Must
It is in your hands that the future of your child’s education is certain, so saving or investing early is a must. If not from now, then when? Immediately determine your financial goals and choose financial products to start preparing for the future costs of your children’s schooling.