Children's Educational Plans (1)
Children's Educational Plans -- When we start to plans for our children's education, there are two elements that must be count, they are savings or investments to achieve the funding needs of education and protection of the risks or possible non-compliance is expected to fund education.
1. Determine the time when the need for a cost that must be met, so that it can be determined how long it takes to fulfill them. For example, you had four years until your child starts college.
2. Determine the location of the child's education needs. More detail is better, so that more accurate cost estimates. For example, overseas universities in the Netherlands it is, exactly in the city of Amsterdam.
3. Then, find out the cost of education in that city (present value). Education cost information should be sought total costs, i.e. tuition fees (if any), school fees and living expenses while in there (if in another city or abroad). The cost of the school itself can still be divided into school fees, uniforms and cash book (if any). This information can be obtained at the embassy.
4. Next, calculate the cost of education in the "future" (future value). These calculations require information what percentage rate of increase in the cost of education per year in the city or the country concerned. Rate of increase in the cost of education is known as the inflationary cost of education. Keep in mind that inflation for the cost of education is different with the general economic inflation. Usually the higher education inflation rate of inflation than economic. Calculation to obtain the cost of "someday" is today the cost of (P) multiplied by 1 plus the inflation rate (i) and raised the number of years "later" (n).
The formula is = P x (1 + i) n
5. After we know amount of the cost of "someday" it can be calculated how much money should be saved per year or per month. To calculate how much money should be saved, we must find out what level of investment of such funds to be reach the target of education cost later. Level of investment return used is the level of investment in a product or financial instruments such as deposits, unit linked, mutual funds or other. Level of investment in financial instruments may be divided if invested domestically or abroad. And the state should use the currency in which the children's education will be conducted.For example, when using domestic deposits as an investment instrument and the purpose of education our children are in the United States, the level of investment referred to calculate the funds to be saved per year or per month is a dollar deposit that gives 1% gross rate of return.
The steps to calculation can be used to find out how children's education. By knowing the costs of future education needs, then you can plan for their education with better and more effective.
Child's educational planning is to manage how the funds needed for education of children can be collected by parents or guardians of children, either normal or if there is a risk to the parent / guardian of the child.
The meaning here is normally a parent or guardian if the child can spend the child's education. Risk in here is when the parents / guardians of children affected by disasters such as prolonged or severe illness, accidents resulting in disability until the death of a parent or guardian before the child's education fund to be enough. Risks that may arise befall a parent or guardian of this child will lead the process of collecting funds for education will be hampered, if not stopped, so that education could be at risk could not be continued to the next level.
Well, from the definition above we can conclude two things are closely related to the child's educational plan, the savings or investments to raise funds for the education of children and protect education funding from the risks that threaten the accumulation of funds. The risk is another illness, disability or death. Where the importance of educational planning will be done early because the sooner plans were made and implemented then the lower the risk of not achieving the desire of parents to prepare their children's education fund.
In planning for children's education, before you save or invest to set up education funds, the first step to do is to estimate how about - about the amount of funds needed in future to every child's education. The more complete data on the amount of funds needed are the more accurate estimate of the amount of funds needed in the future.
Assuming of course necessary in the future inflation expectations are quite conservative. Then, after calculating the funding needs for the future education of children, the second step is to calculate how much money to save or invest for the purpose. Also use the assumption that the interest or return on investment for this calculation is conservative. (To be continued)
.gif)
.gif)
