


Planning for your child’s future can feel overwhelming, especially when it comes to the rising costs of higher education. The good news? With the right financial strategies, you can help pave the way for your child’s dreams while teaching them valuable lessons about money along the way. Here’s how to start saving for university or college—and tips for getting your kids to be more mindful about their spending habits!
Winston Churchill said it best: “Saving is a very fine thing, especially when your parents have done it for you.” As parents, we all want to set our children up for success, and while we can’t predict their future, we can help them pursue their dreams by planning ahead financially.
Money may not be everything, but it does open doors to opportunities—especially when it comes to education. Starting to save now can provide your child with a strong foundation and a head start in life. We’ve compiled some key information about budgeting for studying in various popular countries – open up your Notes app and read on!
Read more: 5 Ways To Financially Prepare To Be A Parent In Hong Kong
Global education trends
The HSBC Global Report on The Value of Education (2018) notes that nearly 50% of Hong Kong parents wish they had started saving for college earlier as they claim to spend over $400,000 on their child’s university education. The average student faces a funding gap of $143,620 and 83% of students are juggling work and study. No wonder that saving for our children is increasingly becoming a necessity.
Also, in today’s globalised world, overseas university education is a common option. More than 50% of Asian parents consider sending their children abroad for further studies. This is supported by OECD data, which shows that 57% of international students in OECD countries in 2021 came from Asia, led by China and India. Studying abroad may be one of the most beneficial experiences for youth today, aside from providing them with a world-class education. Living in a new environment helps students become independent, develop a global mindset, increase cultural sensitivity and the ability and willingness to take up challenges. While they are away from home, they can also learn self-reliance and financial prudence. All of these attributes are attractive to future employers and serve as stepping stones to a successful career.
So how much does it cost?
Let’s compare three popular destinations for overseas students — the US, Australia and the UK. We’ll compare what a student would pay in Hong Kong dollars for tuition, accommodation and other living expenses.
- USA
The US is one of the world’s most popular destinations for higher education – and also one of the most expensive. Tuition fees range from $5,000 to $50,000 per year depending on the institution and program. Most undergraduate degrees last four years, meaning students may graduate with $20,000 to $200,000 in tuition costs alone. Accommodation and living costs depend on location and institution type.
- Australia
On average, sending your child to Australia to pursue an undergraduate degree will cost you upwards of HK$81,377 in tuition fees alone. The cost of living in Australia would be a minimum of $89,815 per year. For example, annual tuition fees at the University of Sydney range from A$45,500 – 52,000, while living costs in cities like Melbourne average A$24,500 per year.
- United Kingdom
For international students, studying in the UK is often considered good value for money compared to destinations like the USA or Australia, especially given the global recognition of UK degrees. Tuition fees for undergraduate programs typically range from £11,400 to £38,000 per year, depending on the course and institution, with laboratory and clinical degrees generally costing the most.
In addition to tuition, living expenses in the UK can add approximately £1,300-1,400 per month, depending on the city.
Read more: 6 Things You Need To Consider For Your Teenager’s UCAS Application
Pitfalls of inadequate planning
According to an HSBC survey in Hong Kong, parents earmarked an average of $3.6 million per child to fund a 7.1-year UK education, including pre-university or postgraduate studies.
Some parents do not feel the need to save for their children’s future as they mistakenly believe that an education loan is the solution to support them in their further studies. While these loans can help, parents often overlook the additional expenses that accumulate over time, such as accommodation, travel and living expenses.
Furthermore, many do not realise the burden of repaying a loan that they may pass on to their children. Graduates who have the responsibility to repay their loans could find themselves facing a decreased financial capacity to start a family or buy a house, which could also hinder their ability to start saving for retirement at an early age. Student loans are also frequently repaid with a fairly high-interest rate. In the UK, for example, the standard undergraduate student loan interest rate has increased to 7.3% as of 2024, up from 5.4% in 2019.
It is also important to note that tuition fees, not to mention housing and other living expenses, have soared in recent years, at a rate that dramatically outpaces inflation. Therefore it is unrealistic to expect that costs decades on will remain the same as today.
Learning from experience
The HSBC Global Quality of Life Report 2024 highlights that only 55% of affluent parents in Asia have an education savings plan. Financial concerns are high, with 31% of parents expecting their children to take on loans, 45% hoping for scholarships, and 22% even considering selling assets to fund their child’s education.
We all have a part to play in our children’s development. So, have you considered how you are going to fund this important stage in their lives? Depending on whether you want to pay the entire amount or fund a part of your child’s higher education, it is imperative you put a plan in place by setting aside a target amount for your children’s education needs.
Making a start
How much do you need to invest? Quite simply, as much as you can afford. The important thing is to start investing as soon as you can so that your money has plenty of time to grow. This is true whether you save on a regular basis or invest lump sums as and when you wish. It’s surprising how much even small amounts of money saved on a regular basis can grow given time.
Let’s look at an achievable amount of $10,000 per month. Set that aside for your child’s education and assuming a basic 5% growth rate, after five years, you will have $682,294. After 15 years, that amount will have grown to $2.6 million. If you have two or more children, you may consider a more aggressive target of saving $30,000 per month. In 10 years, you will have saved $4.67 million. That should be enough to see them through most of the top universities worldwide (and of course, you could push them to strive for scholarships!). Besides the necessity of saving, being fiscally responsible is also an important life lesson we can impart to our children. Let’s take a quick look at what your compounded savings could be, if you start now.
Read more: University Applications: Thinking Outside The Box
However you wish to invest, choose a simple, flexible way that gives you every chance of success in providing for your child’s future. Without a helping hand, your child’s hopes and dreams might remain just that. But with sensible financial planning, you can help make them a reality. One thing is certain: the earlier you start to save, the better their start to adulthood (financial and otherwise) will be.