UAE: Parents anticipate spending $163,000 per child on higher education
By adopting a strategic approach to savings, parents can better position themselves to meet their children's educational goals and secure their futures.
Dubai: Parents in the UAE are bracing for the significant financial challenge of funding their children's higher education. According to a recent survey conducted by YouGov and commissioned by Zurich International Life, part of Zurich Insurance Group, the anticipated costs range between AED250,000 ($68,000) and AED600,000 ($163,000) per child. This financial burden underscores the need for effective savings strategies to ensure children can pursue their educational aspirations.
Financial preparedness: A growing concern
Despite the looming costs, the survey reveals a concerning trend: 29% of parents have yet to start saving for their children's university education. This gap in financial preparedness could potentially limit the educational opportunities available to many children in the UAE.
The dominance of traditional saving methods
The survey also highlights the continued reliance on traditional saving methods in the region. A significant 77% of the 1,000 residents surveyed still prefer bank deposits, while 48% invest in shares. However, only a small fraction—14%—are utilizing education-specific savings plans, which are specifically designed to maximize growth and offer targeted benefits for educational expenses.
Education-focused savings plans
While conventional bank deposits offer safety, their lower returns may not be sufficient to keep up with the rising costs of higher education. Education-focused savings plans, which often include investments in growth-oriented funds, present a more strategic approach. These plans are designed to not only accumulate savings but also outpace inflation, ensuring that the value of the savings is preserved over time.
David Denton-Cardew, Head of Propositions at Zurich in the Middle East, emphasized the importance of starting early with the right education savings plan. “The substantial costs associated with higher education underscore the urgent need for effective savings strategies,” he said. “Starting early and choosing the right plan can be a game-changer in helping parents save today for their children’s future.”
Strategic allocation of monthly income
The survey found that most parents believe allocating 6% to 20% of their monthly salary is sufficient for education savings. However, the survey also indicates that more effective and affordable savings plans are necessary in the UAE. Tailored education savings plans remain a sustainable strategy to help parents give their children the best chance at their dreams.
Benefit of savings and life insurance
A notable 87% of respondents expressed strong interest in education savings plans that also offer life insurance coverage. These dual-purpose plans not only help in accumulating funds for education but also provide a safety net, ensuring financial security for the family in case of unforeseen circumstances.
Balancing growth and security
Denton-Cardew noted that a well-structured education savings plan does more than just save money; it helps grow your investment through appropriate strategies while ensuring its protection.
Take away
Parents in the UAE are encouraged to consider education savings plans that offer tailored solutions, long-term growth, and the added peace of mind of life insurance coverage. By adopting a strategic approach to savings, parents can better position themselves to meet their children's educational goals and secure their futures.