Education Planning
There is no greater gift than that of a sound education. High quality education allows young adults to transition into their careers with ease, and live a life defined by choice.
While higher education was previously the reserve for the elite in prior generations, many parents now agree that quality higher education is a powerful ingredient for success in the society and workforce of the future.
University education provides understanding, knowledge, and a powerful foundation for life. In the global era, it is also increasingly a requirement to secure the visas required for expatriate careers, and to advance in global companies.
While the value of education remains the same, the cost of education is rising.
Universities are increasing tuition fees annually, and the general cost of living, along with student accommodation is rising in line with inflation. This is particularly impactful in global cities such as London, New York, and Melbourne.
There are an abundance of courses and institutions from which to choose. Rather than this decision being limited by financial resources, we believe it should be driven by personal preference and academic ambition.
Melbourne Capital Group is here to help you map this journey from start to finish. By understanding your goals and total costs of education, we eliminate the stress of the entire process by structuring a fitting plan.
Case Study
Steven & Kate
Age: 42, 39
Profession:
Regional Manager for Travel Provider & Yoga Instructor.
Goal:
To be able to afford for their two children to continue their international education in Thailand and fund their higher education.
Background:
Steven and Kate are both from the U.K. and have lived and worked in Bangkok for the past 3 years, earning in local currency. They have two children, Betty who is 8 and Charlie who is 6. Up until now they have been able to afford the school fees for Betty and Charlie who are both in an international school teaching a British curriculum. Like most expat families living in Thailand, Steven and Kate enjoy travelling the region and spending weekends away at beach destinations with their kids.
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Steven and Kate want to live for today while also accumulating enough wealth to be able to continue to support the education fees costs to provide the best opportunities for their children.
Currently, the school fees for the international primary school are costing 420,000 THB which is roughly $12,000 per child, per year. This cost will gradually increase each year for the following 9 and 11 years respectively until the kids have finished primary and secondary school. The average cost of schooling over this period is approximately $14,000 a year.
Primary School & Secondary School Fees
Betty - $14,000 x 9 = $126,000
Charlie - $14,500 x 11 = $159,500
Total = $285,500
Like most parents, they would like to give their children the opportunity for higher education and go to university, this will likely be back in Europe, Australia, or the U.S.. In order to fund the education costs, we have worked out the following based on an average of a 4-year degree.
University
Betty Tuition Fees - $30,000 x 4 = $120,000
Charlie Tuition Fees - $35,000 x 4 = $140,000
Betty Living & Accommodation Costs = $25,000 x 4 = $100,000
Charlie Living & Accommodation Costs = $30,000 x 4 = $120,000
Betty Travel Expenses = $8,000 x 4 = $32,000
Charlie Travel Expenses = $10,000 x 4 = $40,000
Total = $552,000
The figures are eye watering and quite alarming for Steven and Kate. Having already paid for three years of education, they are facing further education costs of over $800,000. Stevens package in Thailand includes a salary of $160,000 and a discretionary performance related bonus of approximately $30,000 per year, along with accommodation costs of $1,000 per month which cover half of their rental. Depending on how busy she is, Kate usually earns approximately $2,000 per month which the couple put towards the rest of the rent and living costs. So, as it stands there is a shortfall for the education costs, with the majority of the fees falling due in 9 to 11 years’ time.
Frequently Asked Questions:
- Are these schooling fees correct?
- How do other people afford these education fees without help from their employer?
- How are we going to come up with $800,00 to fund these ongoing education costs over the next 15 years?
- If our children decide to go to university in another country, how will the foreign exchange rates affect our investment if we need to pay fees in another currency?
The first step for Steven and Kate was to have a consultation with one of our Private Wealth Managers who have years of experience helping expats while living in Southeast Asia. Meeting with Melbourne Capital Group, after work hours at their home, Steven and Kate felt relaxed and were able to take their time and were able to get clear on where they stood financially. Be clear on what the savings goals were and crafted a path that aligned their priorities for enjoying life now and in the future but at the same time didn’t comprise the opportunities for the children’s futures.
The Results:
Steven and Kate set up a savings plan for their children's education with Melbourne Capital Group. They saved $1,500 per month for 15 years and added $10,000 of Steven's bonus annually, which will result in a fund worth $825,480 at the end of the term. They could also change the currency of their investment if their children's university location changed. They met with the team every three months, and could track their investment's performance online. The couple had peace of mind and could access the funds in case of an emergency.
Overall, Steve and Kate felt very reassured that they had consulted a professional and that they knew their children’s futures were in good hands.
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