Planning for your child’s education early is important because education costs continue to rise. Being financially prepared can help your child access educational opportunities and grow into a capable adult. Planning from the time your child is one month old through university therefore calls for careful study and consideration so you can make the most of your investment.
Set an education goal
The first step in planning for your child’s education, from one month old through university, is to set a clear goal. Consider whether you hope your child will attend primary school, secondary school, or a particular university. A clear goal can help you estimate costs and plan your investments appropriately.
Estimate the costs
After setting a goal, estimate all expenses related to your child’s education, including tuition, school supplies, activities, and other necessary personal expenses. A careful estimate can help you determine how much to prepare and adjust the investment plan to fit your budget.
Choose an investment strategy
Once you know how much may be needed, choose a strategy that fits your time horizon and financial goals. Options for saving for a child’s education range from a savings account to mutual funds, stocks, or real estate. Choosing an appropriate strategy may help you pursue your financial goal.
Compare investments
Comparing the returns of different types of investments is important when deciding what may suit you. The comparison can help you understand the options and the risks that may come with them.
Investing versus not investing
The decision whether to invest for your child’s education can have a significant effect on your family’s financial future. Investing may help your money grow over time so it can be used for education expenses, while not investing may leave you facing financial challenges later.
Costs from 1 month to 3 years of age
From infancy through age three, most costs are for care, personal items, and other necessities for a young child. The estimated budget for this stage is THB 50,000–100,000 per year.
Costs from 3 to 6 years of age
When your child reaches kindergarten age, expenses may increase because of tuition, school supplies, and skill-building activities. The estimated budget for this stage is THB 80,000–300,000 per year.
Costs from 6 to 12 years of age
During primary school, expenses are mainly tuition, textbooks, school supplies, and other personal costs. The estimated budget for this stage is THB 100,000–400,000 per year.
Costs from 13 to 18 years of age
When your child reaches secondary school, expenses may rise again because of tutoring, activities, and other personal costs. The estimated budget for this stage is THB 150,000–500,000 per year.
University costs
University is the largest education expense. It may include tuition, accommodation, food, and other personal costs. The estimated budget for this stage is THB 150,000–600,000 per year.
Short-term investment plan (1–3 years)
A short-term plan of 1–3 years may suit someone with a near-term goal. Suggested options include a fixed-term deposit or short-term debt instruments, with an estimated return of around 1–2% per year.
Medium-term investment plan (4–6 years)
A medium-term plan of 4–6 years may suit someone with more time to invest. The suggested approach is to combine debt and equity instruments to pursue a higher return, with an assumed return of around 5% per year.
Long-term investment plan (7 years or more)
A long-term plan of seven years or more may suit someone with a long-term financial goal. The suggested investment is a global index, with the potential for a higher return than other investment types and an assumed return of around 8% per year.
Define your child’s education goal
- Defining your child’s education goal is an important first step. It helps you decide where you want your child to study, what level of education to pursue, and the approximate cost.
Estimate expenses at each age
- Estimating expenses at each age helps you determine how much to prepare for tuition, school supplies, activities, and other personal costs.
Choose an investment strategy that fits the time horizon
- Choosing a strategy that fits the time horizon is important for pursuing your financial goal. A short-term investment covers 1–3 years, a medium-term investment covers 4–6 years, and a long-term investment covers seven years or more.
Compare investment returns
- Comparing the returns of different investment types can help you choose an option and understand the overall choices and potential risks.
Prepare for risks with insurance
- Planning for risks is important. Life or health insurance may help cover expenses that could arise in the future.
Teach children about money
- Financial education can help children understand money and plan their own finances more effectively.
Plan and estimate costs
Planning for your child’s education from one month old through university begins with carefully estimating expenses. This helps you understand how much to prepare and choose an appropriate investment plan.
Set an education goal (school or university)
Setting an education goal is an important first step. Decide where you want your child to study, what level of education to pursue, and the approximate cost.
Estimate expenses at each age
Estimating costs at each age helps you prepare for tuition, school supplies, activities, and other personal expenses.
Review and adjust the savings plan
Reviewing and adjusting your savings plan is important so you can adapt your investment plan as your financial situation changes.
Estimated education costs
Education expenses vary depending on the level of education, the school, and other personal costs. The estimates below provide an overview.
Age 1 month–3 years: care and supplies (THB 50,000–100,000 per year)
From infancy through age three, most expenses are for care, personal items, and other necessities for a young child.
Age 3–6 years: kindergarten and skill-building activities (THB 80,000–300,000 per year)
When your child reaches kindergarten age, costs may increase because of tuition, school supplies, and skill-building activities.
Age 6–12 years: tuition and general expenses (THB 100,000–400,000 per year)
During primary school, most expenses are tuition, textbooks, school supplies, and other personal costs.
Age 13–18 years: tutoring and activities (THB 150,000–500,000 per year)
When your child reaches secondary school, costs may rise again because of tutoring, activities, and other personal expenses.
University: tuition, accommodation, and monthly expenses (THB 150,000–600,000 per year)
University is the largest education expense and includes tuition, accommodation, food, and other personal costs.
Total estimated education costs: THB 1.5–3 million
The estimated cost of your child’s education from one month old through university is THB 1.5–3 million per child.
Investment strategies
Choosing an investment strategy that fits your time horizon and financial goals is important when working toward your target.
Short-term plan (1–3 years): fixed-term deposits and debt instruments (estimated return 1–2%)
A short-term plan of 1–3 years may suit someone with a near-term goal. Suggested options include a fixed-term deposit or short-term debt instruments, with an estimated return of around 1–2% per year.
Medium-term plan (4–6 years): a mix of debt and equity instruments (estimated return 5%)
A medium-term plan of 4–6 years may suit someone with more time to invest. The suggested approach is to combine debt and equity instruments to pursue a higher return, with an assumed return of around 5% per year.
Long-term plan (7 years or more): invest in a global index (estimated return 8%)
A long-term plan of seven years or more may suit someone with a long-term goal. The suggested investment is a global index, with the potential for a higher return than other investment types and an assumed return of around 8% per year.
Compare investing with not investing
Comparing the possible outcomes of investing and not investing can help you see the differences between the approaches and the importance of planning for your child’s future.
Save THB 5,000 per month for 18 years
Assume you start saving for your child’s education at THB 5,000 per month for 18 years.
No investment: savings of THB 1,080,000
If you do not invest, your savings would total THB 1,080,000.
Invest at 8% per year: savings of THB 2,240,000
If you invest and receive an average return of 8% per year, your savings would grow to THB 2,240,000.
Difference: THB 1,160,000
The difference between investing and not investing is THB 1,160,000, illustrating the effect of compound interest.
Additional considerations
Along with investment planning, consider these additional points.
Compound interest over the long term
Compound interest can help your money grow over the long term. Starting to invest early may help you benefit from compounding for longer.
Insurance against risks
Insurance, such as life or health insurance, may help cover expenses that could arise in the future.
Financial education for children
Teaching children about money can help them understand personal finance and plan their own finances more effectively.
Planning your child’s education from one month old through university takes knowledge, understanding, and careful planning. Starting early gives you more time to invest and an opportunity to work toward your financial goal. Learn more and consult a financial professional to help make your plan effective.
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