What does your child want to be when they grow up?

If you ask a child what they want to be when they grow up, you will encounter various answers: astronaut, doctor, guest or garbage collector. Beyond the amusement that the answers to this question provoke, I think you want your child to do what he wants. Isn’t that right? Over time, he will find out that the guest job doesn’t exist, and the garbage collector job, he will come to consider that it is not a good job for him and will reorient himself.

Professions and money

Is your child important to you? Is it important for him to achieve his professional dreams? If you answered yes to both questions, then answer me the following question: how much did you save for his studies?

The answer to this question causes a block for most parents, because they haven’t thought about it and haven’t saved anything. Until now, they were happy to have a child and that he brings smiles to their faces every day, especially if he started talking and mumbles some words. If the child is older, the amusement comes from his answers to various serious questions. Sometimes the adults around him marvel at the reasoning behind the answers given. But they haven’t thought about the expenses of his maintenance more seriously until now. “Let it go, we’ll manage!” This is how the Romanian people work: “Let it go, it’s going well!” or “We’ll see: we’ll manage!”

(I’m not saying that there aren’t responsible parents who also plan financially for the arrival of a new family member, but I’m highlighting the other camp and exaggerating, perhaps, a little, to highlight the financial situation, from the perspective of the child’s future.)

Do you want your child to become a garbage collector?

I don’t think so. Then, why didn’t you think of saving for his future, for his studies?!

Well, why save when, if you turn on the TV, you find money on the spot, even a consultant comes to your house to bring you the money needed for your child’s studies?! I believe you! Why save when you can borrow money?

Financial planning to support your child’s education

Why, in our culture, don’t we think about our child’s education and all their expenses, the way Americans do?

Have you watched an American movie at least once? There you see how parents, before the child is born, set up a savings fund for their child’s education. Yes, a savings plan with access over 20 years. Why does their culture have this savings plan for their child’s later expenses and not ours? Why do they, when an unexpected extra expense occurs, first think about whether it is profitable to make that expense and whether they have money left over for their children’s studies, while Romanians spend without taking into account the future, even the nearest future: the end of the month and, sometimes, some, take out personal loans to end the month with all the payments made?!

Maybe because their studies are more expensive than ours?

Let’s see!

According to the study conducted by the British magazine Times Higher Education, in the top of the world’s most renowned universities, Harvard occupies the first position, being also the most expensive. The total tuition costs at Harvard cost 55,000 dollars for a year of study. Of which $36,000 is tuition, about $8,000 is rent, and $3,000 is health insurance. Berkeley, the last university in the list, costs $20,000 just to get in, because the annual tuition is $30,000. As for an MBA, it costs $150,000 per year.

In Romania, a year of study costs the young student or his parents, on average, 3,200 lei per year, just the tuition fee. But what if your child wants to study abroad? Will you be able to afford it?

It is cheaper to study in Romania, that’s true, but maybe your child gets a scholarship to study abroad and you have to bear some costs. Where will you get it from?

If you only take into account the cost of food: 300 dollars, accommodation: 500, to which you add 200 dollars for various expenses (outings, books) and cover them from a loan, you end up paying 255 lei per month for 5 years, at an interest rate of 10%/year. For the borrowed amount of 12,000 lei, you will repay 15,297 lei in total.

If, on the other hand, you want to support your child with the cost of tuition at the university in the last place, through a loan, the monthly installment reaches 10,083 lei, for 5 years.

What would happen if you saved some money from the birth of your child, for 18 years? 1,000 lei would be needed monthly. If you invest the money, then the financial support is lower, because the returns on investments are higher than the interest on a bank deposit.

Financial decisions are about alternatives, but also about planning.

The conclusion is not to not have children, but to plan their future, including their studies.

Do you want what is best for your child? Do you think the cost of their schooling abroad is too high? Maybe you want to offer them schooling here. But what does they want?

Let’s see: 9,600 lei costs 3 years of studies in Romania. And another 6,400 lei for a 2-year master’s program. Our education system also requires a master’s program to complete specialized studies.A total of 16,000 lei for tuition alone, without the monthly cost of 200 – 250 lei for dormitory rent and another 400 – 500 lei for food and various other expenses. If we were to total all the minimum tuition costs: fees, food and rent, if they are not in the city, and this happens to most students, 58,000 lei would be what you would need to save, in total, to be able to afford your child the studies necessary for their professionalization. And be careful: it is the minimum cost.

The future is expensive if you don’t plan!

The installment for a loan costs you 1,232 lei. This is the price for those who have not prepared for such costs, who have not planned for their child’s future.

Planning saves you from such a cost. The good part is that with 200-250 lei allocated monthly for the child’s studies, from the moment of his birth, all worries disappear.

We have talked so far about the higher level of education. Should I also remind you of the costs of the other levels of education; pre-university levels?

The costs start even from kindergarten. A kindergarten costs around 260 lei per month at a state institution versus 500 lei at a cheap private kindergarten. State school costs 800 lei / year (costs of supplies) vs. 12,000 lei/year for private school, and state high school costs 800 lei/year vs. 6,400 lei for private. The total costs for 16 years of schooling up to college cost 11,180 lei for the state and 133,100 lei for the private.

Have you ever thought about these costs?

What does your child want to do? Ask him and calculate your costs! Don’t let time pass and don’t postpone the moment of saving for your child’s future. Basically, he is everyone’s future, because the future of our children also represents our future!

Success in becoming aware of money (and its implications in our lives)!