The average tuition fees for a bachelor’s degree in business studies in Malaysia is about RM 43,000 per course. Engineering programmes averages about RM 70,000 for four years and IT courses are about RM 55,000 for a three-year bachelor’s degree programme (Source: StudyMalaysia Research Team; Brochures of some higher learning institutions.)
Living cost is about RM 15,000 per annum, meaning around RM 45,000 to RM 60,000, depending on the duration of the programme.
Let us assume that a child has chosen to do a business programme in a local university. That will cost a total of RM 88,000 in today’s money. The education inflation rate is about 3%, about the same as the national inflation rate. This means RM 90, 640 next year. If your child is a year old today, by the time he or she becomes an undergraduate, the cost would have risen to RM 154,308.
Let us take this figure of RM 154, 308 as a reference. Keep in mind that this is for the bachelor’s degree programme, not inclusive of foundation programme.
The next question is, how to come with the funds. If you already have an answer, then you can stop reading at this point and invest your time in other things. If you haven’t, then I suggest that you look at investing.
How much do you need to invest for 18 years to reach this amount? A quick calculation shows that, with an 8% return, you need to make an annual invest of RM 4,200 every year or RM 350 monthly for the next 18 years.
To put aside RM 350 per month for education of your child can be a challenge and you might be asking yourself how you can do this?
Look at your expenses, how much can you cut? I know, this sounds old and tired, but cutting down the expenses is the best defensive step you can take. And to win in any game, your defences must be good. Just like a football game, no matter how many goals you score, if you have a leaky defence, you are going to bleed. In terms of
finances, if you spend more than you earn, it just a matter of time before you get into trouble.
Look at other ways in which you can invest this amount. Start planning now.
For the purpose of keeping this article short, a few assumptions were made, thus the amount of RM 350 per month is just an example, your amount might be higher or lower, depending on:
i) I) Type of course
ii) II) University/College
iii) III) Local/Overseas
iv) IV) Duration
Apart from the above, you will need to consider:
i) Financial Health
ii) Life Insurance
iii) Inflation Rate
iv) Capital Protection
v) Investment Strategy
Ideally education planning should begin as soon as the little ones arrive (or even before). If you have not started one, it is time to do so.