Families planning to send their children abroad for higher education benefit from early financial planning, making education more accessible.
Early financial planning eases access to international education
A GROWING number of Asian parents are pursuing international education for their children. Despite economic obstacles like inflation and unfavourable exchange rates, parents are still keen on securing a world-class education for their children.
The 2024 HSBC Global Quality of Life Report, which surveyed 11,500 affluent individuals, highlighted the importance of overseas education across 11 markets.
The survey found that 51% of Malaysian respondents are planning to send their children to study in another country. This trend was present in other emerging markets, notably India and Indonesia.
Malaysian respondents cited international exposure as the top reason for preferring to study abroad. Up to 35% of them believe that international exposure gives their children a competitive edge in the job market.
The quality of education and the availability of specialised programmes were also cited as major reasons for sending their children abroad.
Cost of overseas education
Australia and the United Kingdom are the top two preferred education destinations for Malaysians, followed by Singapore, the United States and New Zealand.
HSBC’s survey found that on a global average, a three to four year degree abroad ranges anywhere from US$192,000 to US$256,000, equivalent to up to 31% of the average retirement savings amount of Malaysian parents’.
As overseas education can be costly, it is essential to take a proactive approach to financial planning early. This will ensure that the family‘s financial security is safeguarded, keeping retirement goals on track while their children abroad stay focused on thriving in their studies.
Strategies for financial readiness
Saving regularly is a reliable way to build a dedicated education fund over time. This disciplined approach ensures that even small, consistent contributions can accumulate significantly, easing the financial burden when the time comes.
To supplement this, a structured savings plan is important as it offers a clear roadmap for achieving financial objectives. Such a plan helps maintain progress toward savings goals while providing a sense of security and ensuring that all necessary education expenses are covered.
Next, making recurring investments early on is a prudent approach that ensures a steady increase in resources while fostering consistent growth. Committing to regular investments early leverages the benefits of compounding, potentially resulting in more substantial growth of an education fund.
Parents should also consider saving or investing in the study destination’s currency early to mitigate the risk of currency fluctuations.
However, it is important to note that forex hedging is not a profit-making strategy and that it only protects against losses due to currency fluctuations.
It is also recommended to diversify one’s investment portfolio by including HSBC’s foreign currency unit trusts or bonds. Additionally, investing in foreign real estate can effectively reduce risk exposure and hedge against currency fluctuations.
“We’ll prepare your children for overseas education with tailored Premier services, including overseas accounts with access to 11 currencies and zero international transfer fees, and supplementary debit or credit cards. Our dedicated relationship manager will advise and guide your financial planning and investment strategies so that you can provide your children with the best education experience.”
Linda Yip
HSBC Malaysia wealth and personal banking country head
HSBC’s financial solutions
HSBC’s survey found that 95% of Asian parents are concerned about preparing essential banking services for their children.
Besides financial planning and building a sufficient fund, having the right support throughout their children’s overseas journey is equally important.
HSBC Premier offers education-specific solutions to help make the transition smoother and their children’s experience abroad worry-free.
> Open an overseas account (1) in Malaysia before departure.
> Zero transfer fee for instant international money transfers, for 11 currencies in a single HSBC Everyday Global Account (2).
> Supplementary debit and credit card for day-today spending, travel or emergencies.
> HSBC Premier privileges (3) and benefits are extended to children in Malaysia and abroad.
For HSBC Premier account holders, speak to your relationship manager for further assistance or any inquiries.
Fill in this form to learn more about HSBC Premier’s services and support.
1) Subject to host country/region’s approval.
2) Member of PIDM. Protected by PIDM up to RM250,000 for each depositor. For more information, please visit HSBC/HSBC Amanah Everyday Global Account/-i at hsbc.com.my/ega.
3) For spouses and all children between ages 18-30. As long as Premier Family’s Primary HSBC/HSBC Amanah Premier customer in Malaysia meets the Premier criteria via: (i) Total Relationship Balances of at least RM300,000 at all times (ii) Premier Mortgage (iii) Premier by Perks@Work (iv) Premier Payroll. Premier Family extension to all children will expire on his/her 30th birthday. Thereafter, the child would need to meet Premier eligibility on their own to continue to enjoy fee waiver and if the customer fails to meet any of the above eligibility criteria, monthly account fee of RM150 (and applicable tax, if any) will be charged.
