How can I give my kids their best shot at pursuing their passions?

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Education

Who would have thought Olympic glory was possible? Here are five steps to give your kids their own extra-curricular springboard.

Brandan Chen

Financial Planner

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Build the right support system for your kids begins with a few simple steps and a little help from Manulife Singapore.

What a moment it was on August 13. All across the island, Singaporeans watched as one of our own achieved something we were beginning to think was impossible: Olympic gold.

When 21-year-old Joseph Schooling touched that wall in 50.39 seconds, relegating three of the very best swimmers in the world — including his idol Michael Phelps — to a joint Silver position in the 100m butterfly event at Rio 2016, we felt a sense of a national sporting pride we haven’t shared as a nation in a very long time.

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We celebrated on Facebook. We watched that amazing race footage over and over again online. And you just know more than a few parents signed their kids up for swimming lessons the next day.

It is always amazing to see your child excel in extra-curricular activities. This isn’t just about swimming, the Olympics, or even specifically sports. It could be that your child shows a preternatural aptitude for fine arts. Or perhaps your children are born performers. You want to nurture that potential and give your children the best springboard possible to chase their passions. Then you start to wonder if you’re really going to be able to give them enough support in these pursuits.

It’s a valid concern — we all know education and enrichment can be expensive. But before you give up, citing the hassle of National Service deferment (let’s not get ahead of ourselves, shall we?), here are five steps you can take to ensure both you and your child are in the best position to take on the world.

Because, thanks to Schooling, we now know it’s possible.

child in a Square academic cap

Build up the Child Development Account

The government puts S$3,000 in every Child Development Account (CDA) the moment it's opened. After that, the government will match parents dollar-for-dollar when they contribute to a child's CDA. You can get up to an extra S$18,000 from the government to build the CDA, which also grows at an interest rate of two per cent per annum.

Funds from the CDA can also be placed in the Post-Secondary Education Account (PSEA), which helps to cover university tuition fees. This takes a significant amount off education costs, and gives you more to spend on enrichment programs.

Get an endowment plan

There are a wide range of endowment plans. These are insurance policies that double as savings you receive in a lump sum payout once it reaches maturity (typically after 10 to 15 years with an interest rate range of about 3.25 per cent – 4.75 per cent). This is how it works out in actual money terms.

If you pay a premium of S$250 a month over 10 years (taking an interest rate of 4.75 per cent), you could receive a lump sum payout of just over S$39,000. This can be used to fund your child's tertiary studies, which as of 2016, costs about S$35,000 for a four year degree at a local university.

When you don't have to worry about the cost of tertiary education, you will be able to spend more on enrichment. As an added bonus, your child will be insured — and premiums are lower when your children are younger.

kid all in painting

Remember to factor in enrichment costs

When planning for their child's education, many parents forget about enrichment programs like music lessons (usually S$60 an hour), or holiday workshops (ranging from S$50 to well over S$300).

When setting aside money for your child's education needs, don't forget to include a buffer for enrichment. You can get a good idea of the cost by speaking to school teachers; many schools will subsidise CCAs like music, writing, art, etc. for students. This is usually payable through Edusave and teachers will have the experience to give you a good sense of how much the various activities cost.

Check for employee benefits

This is something a surprisingly large number of younger Singaporeans don’t fully explore. Some employers have special tie-ups with enrichment centres and schools, as part of a family-friendly policy. It is quite easy to overlook these perks, so be sure to ask. Also remember to look for benefits such as childcare subsidies because just like costs, every bit of savings add up and will make a difference.

class all raising hands

Don't get caught up in tuition fever

Singaporeans have a long history of overspending on tuition. According to the Department of Statistics, we spent a high-scoring S$1 billion on tuition between 2012 and 2013. The average household spending on tuition is now S$79.90 per month, with many tuition centers charging rates as high as S$150 per month or more if they have "star tutors".

Before spending so much on tuition, evaluate if your child truly needs it. It is just as important to develop soft skills such as leadership, eloquence, and sportsmanship to be a rounded individual. If your child is already doing well in school, you may want to divert some of those tuition funds to other activities that may help with building these soft skills mentioned as well as widen his social network.

For more ways to get you even more ready for your life ahead, talk to a friendly financial planner from Manulife Singapore.

ILP is a type of life insurance that uses a component of your monthly premiums to purchase units in an investment-linked fund. The advantage of getting an ILP is that it allows one to combine life protection with the potential of accumulating wealth with professionally-managed funds. For instance, Manulife’s InvestReady allows investors to fully invest their funds from day 1 with zero sales charge, as well as enjoy free fund switching so that you can respond to market trends and select the funds that reflect current investment sentiments.

Disclaimer:

This advertisement has not been reviewed by the Monetary Authority of Singapore. The information in this article does not necessarily reflect the views of Manulife (Singapore) Pte. Ltd. All stated information, including external links, are general information and does not constitute or form any recommendation of insurance plan. Certain information in this article may be taken from external sources, which we consider reliable. We do not represent that this information is accurate or complete and should not be relied upon as such.

This article is for your information only and does not consider your specific investment objectives, financial situation or needs. We recommend that you seek advice from a Manulife Financial Consultant before making a commitment to purchase a policy.