Raising a child can cost up to HKD 5.5 million, have you prepared for the education fund?

As parents, we certainly want to provide the best educational environment for our children!

With the increasing standard of living, globalization, and intensified education competition, studying international schools and studying abroad became more popular choices for families to provide their children with broader options.

The cost of studying abroad varies depending on the country, academic major and living expenses. However, it is undeniable that studying abroad inevitably increases the financial burden compared to traditional education models.

Advantages of studying abroad

The advantages of studying in Hong Kong and overseas are numerous. Leaving aside competitiveness, let's focus on children's personal development.

Firstly, studying abroad provides a more ideal environment to improve language skills. Students can quickly improve their language proficiency in a foreign language environment without worrying about a lack of practical opportunities. Good language communication skills will also benefit future work and life.

With the trend of globalization, talents with multicultural backgrounds are increasingly favored by society and enterprises. Through studying abroad, children can gain insights into diverse cultures and make friends from various backgrounds, broaden their horizons, expand their networks, enhance their tolerance, and even reshape their way of thinking.

On the other hand, the experience of learning and living in a new environment can cultivate children's independence and autonomy, which helps them adapt to the social environment in the future.

There are countless advantages to studying abroad, and different study abroad countries have their own strengths. In addition to considering preferences for study abroad countries and academic majors, parents may also consider the most practical issue - the cost of studying abroad.

The cost of studying abroad

When it comes to studying in English-speaking countries, due to their excellent educational resources and living environment, the United Kingdom and the United States are the preferred choices for many students and parents. However, a good study and living environment also means higher study abroad costs. According to statistics, the annual tuition expenses for studying in the United Kingdom and the United States alone exceed HKD 400,000, not including accommodation, traveling and living expenses.

The following are the estimated budgets for studying at universities in popular study abroad countries, such as the United Kingdom, the United States, Canada, and Australia^¹:

Annual tuition fees:

• UK: HKD 100K – 420K
• US: HKD 320K – 440K
• Canada: HKD 53K – 350K
• Australia: HKD 210K – 340K

Annual living expenses:

• UK: HKD 110K – 400K
• USA: HKD 110K – 170K
• Canada: HKD 90K – 150K
• Australia: HKD 110K – 160K

How to allocate education funds?

According to Bauhinia Foundation Research Centre’s estimation, the average cost of raising a child to university graduation for a middle-class family in Hong Kong is around HKD 5.5 million² (which may not include study abroad costs). In the current global inflation environment, only depositing money in banks may not be enough to cope with the expenses of raising children.

It is wise for every family to make financial arrangements early for the next generation. Early allocation of suitable education funds and proper financial planning can ensure that children's future education resources are not affected and they have greater autonomy in choosing their paths.

Here are some financial management approaches that can be used for preparing education funds:

1. Bank savings deposits

Bank deposits have high stability and are the popular way to increase passive income. However, low risk often means low returns.

2. Investment-type wealth management products (including stocks, bonds, and funds, etc.)

Compared with bank savings, this can bring higher returns. However, in recent years, with the global economic situation showing low or even negative growth in various countries, investing in such products also has potential uncertainty.

3. Investment-linked assurance scheme(ILAS)

ILAS integrates investment and life protection functions and diversifies risks through medium and long-term investment. Different from the general investment in investment-type wealth management products in a single field, ILAS assets can be diversified in different categories such as stocks, bonds, and funds in different regions and industries, which achieves diversified investment and manages the portfolio more systematically.

Although the policy value may be affected by investment risks and market fluctuations, ILAS allows customers to change their portfolios according to market conditions, thus controlling investment opportunities more flexibly.

Zurich Insurance (Hong Kong) is also committed to expanding its investment-linked life insurance business, combining investment and life protection features to meet the different needs of customers under the current market conditions, and helping families better plan for their children's education in advance.

_Disclaimer

_{The information in this document is intended as a general summary for your reference only and does not constitute financial, investment or taxation advice or advice of whatsoever kind. You are recommended to seek professional advice if you find it necessary.}

_Sources

_{1. Overseas tuition fees | EF Education First}

_{2. How much does it cost to raise a child in Hong Kong | Wall Street Journal}