Spending on Tutoring and Extracurriculars? Beware—You Might Drain Your Retirement Fund! Avoid These 3 Expenses to Prevent Becoming a 'Downwardly Mobile Elder'

Spending within your means on education is the greatest form of 'affluent parenting' you can give your child.

In today’s low-birth-rate society, most parents instinctively want to give their children the best resources, often overlooking the long-term financial burden this creates. Education expenses—especially tutoring and extracurricular classes—have become a major hidden pressure for middle-aged families.

Parents should first clearly distinguish between 'essential' and 'supplementary' learning activities. For example, tutoring in core subjects like Chinese, English, and math may be essential, but enrolling a child in three extracurricular classes may not directly benefit their future. Review your child’s learning progress every six months, keep only the most effective and enjoyable courses, and pause or drop the rest—this ensures educational resources are used wisely.

Education costs are easily 'underestimated' because they are not one-time expenses but rather a continuous cash flow spanning 15 to 20 years. Instead of reacting each semester, treat education as a fixed expense: set a long-term budget and allocate costs monthly or yearly to reduce financial stress. When budgeting, start from a realistic perspective and reassess financial needs at each stage. However, be especially cautious of unnecessary spending:

- Trend-following tutoring: Enrolling just because classmates are doing so, leading to poor adaptation, limited results, and wasted money. - Unlimited extracurriculars: Each additional class brings long-term financial and time costs, potentially diluting focus on subjects where the child already excels. - Last-minute academic pressure spending: Buying expensive 'crash packages' before exams—high cost, low efficiency. Consistent daily habits matter most.

As rational decision-makers, we must shift focus back to ourselves and understand the ripple effects of education spending on overall family finances.

The cost of raising a child can vary widely—from NT$3 million to NT$10 million—and significantly impacts retirement savings. Insufficient retirement funds don’t just affect you; they compromise your children’s quality of life and financial security. If parents lack retirement plans, their children may be forced to support them long-term, delaying or even derailing their own savings and retirement plans. This burden may be far more detrimental than providing elite education or multiple extracurriculars.

This 'sandwich generation' pressure—caring for aging parents while securing one’s own future—is increasingly common in the context of declining birthrates and changing family structures. Without proper financial planning, children become the fallback safety net. If our generation fails to prepare, our children will face the same困境. The solution isn’t saving a lump sum at once. The real strategy is establishing a long-term retirement plan early. Starting now isn’t just about securing dignity and safety in old age—it’s about ensuring our children won’t bear the burden of our care, allowing the family to remain financially and emotionally healthy.

Therefore, education spending should be reasonable and avoid comparisons or excessive pursuit of elite education.

Beyond self-care, adopting a proactive financial strategy often yields more constructive outcomes.

I’ve observed many people start investing only after several years of work. But shifting the timeline earlier changes everything. Suppose you begin long-term investing when your child is very young. By the time they graduate from university, nearly 20 years of investment growth will have accumulated—compound interest during this period is too significant to ignore. In this scenario, the first amount invested could grow to 4–5 times its original value. This money can serve various purposes: some may use it for education, while others may leave it invested as a starting point for their child’s future wealth. If this principal continues to grow, combined with steady future contributions, extending the timeline by another 20–30 years, the pace of asset growth will diverge significantly. Some may accumulate substantial assets before age 50, gaining greater life flexibility.

In practice, funding a child’s investment doesn’t need to be complex. I often think of red envelopes: many families now see children receiving substantial amounts annually—sometimes NT$20,000–30,000, occasionally even higher. Some parents even give red envelopes to their own children. If these funds are invested early, the long-term compound effect can be substantial.

Beyond red envelopes, Taiwan’s current childcare subsidies offer another potential source. For a first child, approximately NT$5,000 per month (NT$60,000 annually) is provided until age six, totaling NT$360,000 over six years. If unused, this money could be invested, potentially yielding significant long-term returns. Some financially capable parents also choose to make regular small contributions for their children. The key isn’t the amount, but consistency and time—differences become apparent over the long term.

However, I remind myself: merely preparing assets for children may not be enough. Without proper financial literacy, some may spend a sudden windfall like lottery winners, losing the purpose of long-term accumulation. Thus, during a child’s upbringing, I prefer gradually introducing financial concepts.

Conclusion: Break Free from Blind Comparison and Reclaim Control

The middle-aged generation, squeezed between aging parents and their own future, faces immense financial and parenting pressures. But this doesn’t mean we must succumb to collective anxiety.

By setting boundaries, spending within means, prioritizing our own retirement planning, and ensuring we don’t become a burden to our children, we can take control. Further, by precisely managing education expenses and proactively using childcare subsidies and red envelopes as starting points, we can leverage compound interest to help our children build financial foundations early. When we demonstrate discipline and foresight amid pressure, middle-aged individuals can move beyond passive struggle—breaking free from blind comparison and regaining control over their and their family’s lives with stability and grace.

Author | Hugo Admin of the fan page 'Hugo's Investment & Financial Life Perspective,' currently a general manager at a foreign company, MBA graduate from Queensland University of Technology, Australia. Despite holding a prestigious professional title, like many, he realized in midlife that finance is never just about investment—it’s a 'resource allocation battle' involving responsibility and time.

After returning to Taiwan in 2007, he, like most investors, once believed in stock-picking, studying financial reports and technical charts, hoping frequent trading would bring quick success. But after a decade of intense effort, he reviewed his performance and found his cumulative return was negative. This painful lesson taught him: midlife can’t afford trial and error—staring at charts all day isn’t living, it’s working.

In 2017, he shifted to index investing, moving focus from 'pursuing high returns' to 'risk sustainability.' He realized that when responsibilities mount, you need an investment method that can weather storms. This shift not only stabilized asset growth but also helped him maintain family stability under the pressure of caring for elders and raising children.

Since 2020, he has run a fan page sharing his journey from anxiety to stability. He wants to tell every middle-aged reader struggling with life: 'Review your finances, restructure your resources—there’s no need to regret. You can reclaim your right to choose, anytime.'

The end goal of finance isn’t a number, but the confidence to live a dignified, self-defined life.

Books: 'Smart ETF Investing,' 'ETF Stock Saving' (published by Happy Culture)

Reprinted with permission from 'Midlife Finance: Rebuilding Financial Control for Those with Elderly Parents and Young Children Who Can’t Afford to Fall'

Editor: Li Yiqing