Building Your Child’s Tuition Fund: A 5-Step Guide for New Parents

Published: May 18, 2018 | Updated: September 23, 2020 | Posted by: Venus Zoleta | Personal Finance

Tuition Fund |

Pasensya na, anak. Hindi ka namin kayang pag-aralin sa college.”

For parents, the guilt over failing to support their child’s needs is one of the worst feelings in the world. Nobody wants to be that parent who can’t afford to send their child to a good school.

Education in the Philippines will become more expensive in the future because of inflation. So while you’re still young, building a family, and earning a stable income, start preparing financially for your child’s education.

These five steps to building a tuition fund for your child should give you a head start.

1. Set Your Tuition Fund Goals

Tuition Fund |
As with any financial endeavor, everything starts with a goal. Ask yourself: What’s my target school? How much will tuition cost in that school? When you’ve come up with definite answers, you’ll know how much exactly you’ll need to save up.

Choose the School Wisely

Your choice of school will greatly affect your finances and child’s well-being. Give it a careful thought—think long-term and be realistic about how much you can afford today and in the future.

For example, if you aren’t sure you can sustain a high, steady income, never make the mistake of sending your kid to an exclusive school with a steep tuition fee, even though you can pay for it in the first few years.

Huge financial setbacks in the family, such as a job loss or medical emergency, will force you to transfer your child to a cheaper school just so you can keep up with the tuition payments. Consider its serious implications. For one, research shows that changing schools can be bad for a child’s mental health[1].

Compute Your Target Amount

Once you’ve determined your target school, find out its current tuition fee. For the annual tuition of Philippine universities and colleges, refer to this site[2].

Now you can calculate the future cost of your child’s education. These factors should be included in the computation:

  • The annual rate of tuition increase (According to financial experts, tuition fees go up by a yearly average of 10%.)
  • Number of years until your child goes to school
  • The current tuition fee of your chosen school

For easier computation, you can use this online calculator[3]. Enter the information in the corresponding fields and hit “Calculate” to get the result (just ignore the dollar sign).

Let’s say you’re starting a college tuition fund for your one-year-old, and your target school is Ateneo de Manila University. Tuition in Ateneo costs PHP 180,000 per year. With your child entering college in 17 years, you’ll shell out around PHP 900,000 in the first year alone. Multiply that amount by four to get the total tuition cost of a four-year bachelor’s degree: a whopping PHP 3.6 million!

If you choose a school with cheaper tuition fees, like UP Diliman or UST, that will set you back PHP 1 million or PHP 2.2 million in four years, respectively.

2. Create a Savings Strategy

Tuition Fund - Computing Tuition Fund |

Photo by via

Allocate a fixed amount or percentage of your monthly income for the tuition fund. It doesn’t matter if the amount varies—at least you have some money set aside regularly just for that purpose.

Here are some actionable tips to save up for your child’s tuition:

  • Follow the 80-20 savings formula.
  • Add more money to your child’s tuition fund each time you receive a bonus.
  • Find additional income sources. For example, you can start a small business even with a low capital.
  • Involve your child, like putting cash gifts from godparents and relatives into his or her own tuition fund. This will train your kid on financial responsibility at an early age.

If you’ve got little time to save, like when you’ll enroll your toddler in preschool soon, consider getting a personal loan for education from a reputable bank. This will help you meet your urgent need to pay for tuition in any school you prefer, while making repayments easy on your budget with its fixed loan terms and fixed, low interest rate.

To find education loans with affordable terms, use for comparing personal loans in the Philippines.

3. Invest Your Money

Tuition Fund - Investment |

Photo by Pressfoto via

Saving money in a regular bank account for the tuition fund won’t be enough to cover your child’s future educational expenses. It will yield only around 0.25% interest. You need to put your money where you’ll get higher returns, preferably one that more or less matches the 10% growth rate of tuition cost.

Go for a long-term investment vehicle for your child’s education. New parents may consider these investment options for building a tuition fund.

Education Plans

These pre-need plans are designed particularly for parents who want to save for their children’s tuition over a span of five to 18 years. Today’s education plans are far from the traditional pre-need plans of the past, so no need to worry about losing your investment. Check out this article to find out the best educational plans[4] to invest in.


Because you have more than 10 years to save up for your young one’s education, it’s ideal to invest long-term in high-risk, high-return stocks where your money can grow at higher rates than other investment tools.

Mutual Funds and Unit Investment Trust Funds (UITFs)

These are great alternatives to stock investing for busy parents who don’t have time to monitor and analyze the stock market. Professional fund managers will do the difficult work for you. Specifically, an equity mutual fund[5], whose underlying portfolio is equity or stocks, can yield high returns over time.

Variable Unit Life Insurance (VUL)

This is also a great option for parents because, on top of an investment component, a VUL plan also provides life insurance. Getting a VUL will protect your children financially in case you can no longer support them due to death or permanent disability.

The right investment option for you will depend on your needs, goals, and risk appetite. Make sure to research intensively before signing up for any investment tool.

4. Start Investing Now

Tuition Fund |
The sooner you start building a tuition fund for your child, the less expensive your financial preparation becomes. As a new parent-investor, time is your ally—your money has a long time to grow. So don’t delay saving up and investing for your child’s future.

5. Track Your Progress

Building the tuition fund is a continuous rather than a one-time process. From time to time, evaluate your savings and investment strategies vis-à-vis your family’s financial situation and goals for your child’s education.

This way, you’ll know which ones work or don’t work and be able to adjust accordingly. Monitoring the tuition fund’s progress regularly also lets you know if you need to put more money into the tuition fund.

Final Thoughts

Preparing financially for your child’s tuition involves a lot of commitment, time, effort, and of course, money. It’s better to go through all of them rather than feel sorry years later for failing to secure your child’s education. After all, your child’s future is worth sacrificing for.
Personal Loan |