How to devise a plan for my children’s education

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Do you want children? Ultimately, this is a question for you and your partner to decide. But should you choose to opt for having children, you should be aware: educating them, particularly up to a college level, is going to be an expensive proposition. And as we have stated elsewhere, the more expensive something is, the better it is to start saving earlier. 

If you are a middle class and upper middle class Pakistani who is upwardly mobile, then you will want your children to succeed, and in today’s world, that involves going to college. SmartRupee has created a tool to help you achieve that goal. 

Our model starts by asking how many children you currently have or plan to have. For your actual children, it will ask for their dates of birth. For future children you may plan to have, it will ask for an estimated birth date. We recommend inputting June 30 of the year in which you think you will end up having children. 

We ask for this information so that we can calculate how many years you have before you need to start paying for their college education. We assume that your children will start college at the age of 18. 

We also ask what percentage of your children’s education you plan to pay for. We ask this because some families have one spouse pay for part of the children’s education and the other spouse another part, or some other relatives may plan to help with part of the costs. The default is set at 100% of the costs being paid by you, but you can change it if any of these or other similar circumstances apply to you and your family. 

No two colleges are alike, and neither are their cost structures. Also, different families may want different things for their children in terms of where and what kind of education they can afford to give their children. Our model allows you to select which one you would like to have for your children.  

Our model runs on a few assumptions: all of your children will attend the same kind of institution, and that you plan to pay for a bachelors degree only. 

The options we offer are universities within Pakistan, including government universities, as well as private universities. For each of both of these types of universities, we ask whether you will need to pay for a hostel or not, the implication being whether you will send your child to college in the same city or in a different city. Our benchmarks for the costs of government and private universities are the University of Karachi and the Lahore University of Management Sciences. 

We also offer options for saving to send one’s children abroad for education, offering options to save for the costs of college in the United States of America, the United Kingdom, Canada, Australia, Germany, and Singapore. 

Our app will calculate an approximation of how much it will cost to educate your child by the time they reach university-going age. It takes into account educational inflation in Pakistan, and in the case of foreign universities, both educational inflation and the expected depreciation in the value of the rupee against the relevant foreign currencies. 

Based on those estimates of future costs, and the amount of time you have stated you have to save (based on your children’s actual or expected birth dates), the model then calculates how much you need to save per month to achieve that savings goal, assuming you will be able to increase your monthly savings amount by inflation (7.6%) per year. 

The model output will show you what percentage of the expected annual cost you will be able to pay for if you decide to modify the monthly savings amounts. Its default is to show you how much you need to save in order to achieve 100% of the goal. 

For example, maybe you are comfortable paying for only part of your child’s education, because you do not want to pay the total amount, and your child will have to simply have to figure out some kind of scholarships or financial aid. (This is not a totally callous option, particularly if you are going to send your child to the United States, the most expensive education destination, on a rupee salary).  

But regardless of how you work out what the share: the truth is, this is probably the single biggest expense that you will incur as a parent. And it is worth it: college sets up your child for their own successful financial future. It helps to be a prescient planner, and to start saving as early as possible. 

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