Savvy Investments for Education: Laying a Strong Financial Foundation!

Education is one of the most important things for human life. Education has a very good goal, namely to produce a generation that has good personality traits and has very broad insight. Education can be used as a medium to brighten the nation's life, develop abilities, shape character, and bring a nation to a brighter era. With education, complex problems in various fields can be helped and resolved. For example, in the field of education, a country can be hit by the threat of knowledge poverty, it can be hit by poverty and there are also many problems in related fields (Tarigan, Alvindi, Wiranda, Hamdany, & Pardamean, 2022, p. 150).

Education according to Ki Hajar Dewantara's concepts and reflections has several goals. These goals are to realize educational goals for family education, education at the college level, and education for the community. The educational concept offered by Ki Hajar Dewantara focuses on independence. In this case, independence means freedom to be able to make one's choice to be whatever one wants, without forgetting the freedom of other people in making one's choice. Apart from that, Ki Hajar Dewantara also explained that education can help students physically and mentally to lead to better progress in human civilization. Education is a process that will never end so in the long term, education can help create a human figure in the future who has deep-rooted cultural values and Pancasila (Mujiati, Nasir, & Ashari, 2018, p. 273).

The world of education is developing very rapidly. This is none other than because of the roles of educational activist figures who have long tried to advance the level of education in our country. In Indonesia, the main figure is Ki Hajar Dewantara. According to him, education is an effort to shape students' refined character and increase the level of brain intelligence and health of students. Not only that, the Indonesian State's concern and awareness of the importance of education means that the aim of education is embedded directly in the Preamble to the 1945 Constitution with the statement that one of the aims of establishing the Unitary State of the Republic of Indonesia is to make the life of the nation intelligent. In this case, an intelligent nation is defined as the hope of the Indonesian State so that Indonesia will become a nation ready to face various problems that will arise in the future (Tarigan, Alvindi, Wiranda, Hamdany, & Pardamean, 2022, p. 150) .

The development and progress of this era full of new technology also influences various aspects of life. These include the world of education, politics, arts, culture, and economics. This is something that we cannot avoid because technological progress is caused by progress in the fields of knowledge and education. So in this process, humans are required to be able to innovate through a learning process that leads to the practice of the knowledge that has been obtained. Apart from that, technology can also help all human activities in any field. So that in modern developments that emerge in a nation, progress will also be made in the field of technology. This is because technology is part of science in education itself. For example, the emergence of the COVID-19 virus has had an impact on the economic and educational sectors, but on the other hand, it has made technological progress. Therefore, technology is needed for educational activities, such as carrying out teaching and learning activities boldly through Zoom meetings, meetings, and other relevant applications. However, it simultaneously creates new gaps in terms of economic status. For example, because learning activities are carried out in a dare manner (in this case requiring devices used to carry out dare learning) many children from middle to lower levels who do not have the tools for dare learning cannot participate and continue their education (Maritsa, Salsabila, Wafiq, Anindya, & Ma'shum, 2021, p. 92).

Currently, there are two regulating bodies for the education system in Indonesia due to recent socio-political changes. These bodies are the Ministry of Education and Culture and the Ministry of Religious Affairs. Indonesia has a population of 278.69 million people (Badan Pusat Statistik, 2023). Out of the children aged between 15 and 19, 27% attend general upper secondary education and 21% attend vocational upper secondary education. Additionally, 31% of students are enrolled in junior high school programs while 4% are enrolled in tertiary programs. These figures differ from the OECD average, where 37% attend general upper secondary education, 23% attend vocational secondary education, 12% attend lower secondary education, and 12% attend tertiary education. Even though a senior secondary school qualification is often necessary for successful participation in the labor market, 42% of workers aged 25-34 in Indonesia have not attained this level of education, which is higher than the OECD average of 14% (The Organisation for Economic Co-operation and Development (OECD), 2023).

The Asian Development Bank reports that the Covid-19 pandemic resulted in various problems, including the closure of schools. As a result, many students lost the chance to learn both inside and outside the classroom. This is evident from the decrease in the amount of time dedicated to learning, as reflected in the Learning-Adjusted Years of Schooling (LAYS) score (Asian Development Bank, 2021).

           

Source : World Bank. Human Capital Index.

According to the data presented in the table, the findings indicate that the LAYS scores in Southeast Asia have been negatively affected by COVID-19, mainly due to the closure of schools during the pandemic. The average decrease in scores was 0.27 at the Optimistic level, 0.35 at the moderate level, and 0.45 at the pessimistic level. According to monitoring data from CBDIS, 938 children (approximately 1% of children aged 7-18) have left school due to economic reasons caused by COVID-19. The data was collected from 145,000 children in 1,104 villages across 347 districts and 33 provinces. This monitoring is part of UNICEF's collaboration with the Ministry of Villages and Villages (MOV), which began at the end of 2020 (UNESCO , 2021, p. 24).

Source : BPS-Statistics, Indonesia, Catalog number 4101002, Welfare Statistics 2019 (National Socio-Economics Survey (Susenas)

The graph shows that more boys have dropped out of school than girls. However, girls are more likely to leave school due to early marriage. UNICEF research has found that the majority of children drop out during high school, specifically between the ages of 16-18 (UNESCO , 2021, p. 24). The means that the impact of Covid-19 extends beyond just the depletion of resources. It also affects the learning opportunities of children in Indonesia. It is crucial to be well-prepared ahead of time, by having savings, emergency funds, and long-term investments to face unforeseen circumstances. This situation highlights the importance of investments. Although we cannot predict the future, we, as parents, can prepare the best for our children to minimize the possibility of unfavorable situations. As college costs are increasing rapidly, it is essential to start saving now to ensure that our children can benefit from higher education. The earlier we start investing, the more money we will have for specific purposes such as education, giving our money more time to grow and increase its returns.

There are several things you need to pay attention to, the first is to make a plan and start saving now for your child's college costs. Even if we don't have children yet, it would be better if we started saving when we started thinking about having children (Cagan, 2016, p. 175). Second, Calculate Financial Aid, the more expensive the tuition fees at a particular school, the more financial aid offered. In this case, the Sallie Mae site offers long-term planning with data requirements, namely the current cost of the chosen college, the number of years remaining until your child starts college, how much money you have saved and allocated for college costs, and the expected rate of return on your investment (Cagan, 2016, p. 176). Third, use a 529 plan. 529 plans are up-front taxes used to pay for educational expenses from kindergarten through graduate school (Investor.gov : U.S. Securities & Exchange Commission, 2023). There are two types of this plan, namely the college savings plans and the prepaid tuition plans. 529 plans are sponsored and administered by all 50 states and the District of Columbia. However, the rules and fees vary by state.

It's connected to the time value of money theory. This theory states that money is worth more today than it is in the future. Essentially, investing is the only way to increase the time value of money, and if we delay investing, we may miss out on opportunities (Fernando, 2023) As mentioned earlier, the cost of educating our children is significant, and we must plan for it now to ensure they have access to higher education. Remember, the future belongs to those who prepare for it, so let's start saving now.

References

Asian Development Bank. (2021). Asian Development Outlook 2021 : Financing A Green and Inclusive Recovery, April 2021. Philippines: ADB.

Badan Pusat Statistik. (2023). Jumlah Penduduk Pertengahan Tahun (Ribu Jiwa), 2021-2023. Indonesia: BPS.

Cagan, M. (2016). Investing 101 : From Stocks and Bonds to ETFs and IPOs, an Essential Primer on Building a Profitable Portofolio. Massachusetts: Adamsmedia.

Fernando, J. (2023, 03 28). Time Value of Money Explained with Formula and Examples. Investopedia : Corporate Finance : Financial Rations.

Investor.gov : U.S. Securities & Exchange Commission. (2023, 08 31). Updated Investor Bulletin: 10 Questions to Consider Before Opening a 529 Account. Introduction to Investing : Investor Alerts and Bulletins, p. 1.

Maritsa, A., Salsabila, U. H., Wafiq, M., Anindya, P. R., & Ma'shum, M. A. (2021). Pengaruh Teknologi Dalam Dunia Pendidikan. Al-Mutharahah: Jurnal Penelitian dan Kajian Sosial Keagamaan, Vol. 18, No.1, Pages 92.

Mujiati, Nasir, & Ashari, A. (2018). Faktor-Faktor Penyebab Siswa Putus Sekolah. Didaktis : Jurnal Pendidikan dan Ilmu Pengetahuan, Vol.18, No.3, Pages 273.

Tarigan, M., Alvindi, Wiranda, A., Hamdany, S., & Pardamean. (2022). Filsafat Pendidikan Ki Hajar Dewantara dan Perkembangan Pendidikan di Indonesia. Mahaguru : Jurnal Pendidikan Guru Sekolah Dasar, Vol. 3, No. 1, Pages 150.

The Organisation for Economic Co-operation and Development (OECD). (2023, 8 10). Indonesia : Overview of the education system (EAG 2023). Analyse by Country.

UNESCO . (2021). Indonesia Case Study : Situation Analysis on the Effects of and Responses to COVID-19 on the Education Sector in Asia. UNICEF.