5 Common Mistakes Parents Make in Education Fund Planning
For most parents, giving their children access to quality education is one of the greatest dreams. But when it comes to preparing financially, many families make the same avoidable mistakes. These mistakes often lead to stress, last-minute borrowing, or even compromising the child’s education choices.
Here are the 5 most common mistakes parents make in education fund planning:
1. Starting Too Late
Many parents wait until their child is already in secondary school before setting aside funds. By then, the time horizon is too short, and the monthly savings needed becomes much higher.
Example: Saving RM500 monthly for 15 years grows much more than starting at RM1,500 monthly for only 5 years.
2. Underestimating the Real Cost
How Much is the Education Bill?
Parents often calculate only tuition fees and forget about other expenses such as:
Accommodation and living costs
Books, gadgets, and transportation
Exchange programs or overseas exposure
The truth is: living expenses can sometimes cost as much as tuition fees.
3. Relying Only on Savings Accounts
Keeping all education funds in a low-interest savings account or FD feels safe, but education inflation averages 5–7% annually. This means that by the time your child enters university, your savings may have lost significant value in real terms.
4. Ignoring Currency Risk
If you plan to send your child overseas, exchange rates can make or break your budget. A 10% drop in the Ringgit against USD, GBP, or AUD means tuition fees instantly become 10% more expensive. Without hedging or diversified investments, this risk can catch families off guard.
5. Not Having a Protection Plan
Even if parents save and invest, many forget to protect the plan with insurance. If a breadwinner suffers death, disability, or critical illness, the education fund can collapse overnight. Having insurance or investment-linked policies ensures the child’s education is protected no matter what happens. How Does Insurance Planning Protect Your Future ?
Education is one of the biggest investments parents will ever make. Avoiding these 5 mistakes can mean the difference between stress and security. Start early, plan realistically, invest wisely, and protect your child’s future.
