how to save up for tuition | Moneymax

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 for your child’s education cost and knowing how to save up for tuition.

When Should Parents Start Saving for Their Child’s College Tuition?

The answer is as soon as possible. In fact, you can start saving even before your child is born.

It’s an ideal time to save because your expenses won’t be as big compared to when your child starts preschool or grade school. Plus, starting your child’s college fund while they’re still very young gives you at least 10 years to save up for tuition.

Of course, not every parent’s financial situation is the same. More often than not, there will be more urgent expenses like rent, mortgage, insurance, car payments, or medical care. But the sooner you employ ways to save for tuition, the more funds there will be available to offer more options for your child.

More importantly, saving up for education expenses early means giving more time for your savings and investments to grow before you start paying tuition.

How to Save Up for Tuition: 5 Steps Parents Must Take

If you’re a parent, paying for your child’s tuition is perhaps the biggest financial concern. This is why it’s better to save up ahead for a period than stress yourself finding ways to pay tuition and other school expenses when they start coming in.

So what’s the best way to save for college tuition? These five steps on how to save up for tuition 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 your 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 and 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]

Related article: Schools with Highest Tuition Fee in the Philippines

Compute Your Target Amount for Tuition Fund

how to save up for tuition - college cost calculator

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]

Once you have the figures, you’ll know how much to save for tuition, and you can calculate the future cost of your child’s education.

These factors should be included in the computation of your target tuition fund:

  • 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 college cost calculator.[3] Enter the information in the corresponding fields and hit “See Results” (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.

  • Annual college cost today: PHP 180,000
  • College cost inflation rate: 10%
  • Expected years of attendance: 4
  • Percentage of cost you’ll cover from your savings: 100%
  • Years until college: 17
how to save up for tuition - college cost computation

Tuition in Ateneo costs PHP 180,000 per year. With your child entering college in 17 years, you’ll shell out around PHP 1,055,000 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 4.2 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.

Read more:

2. Create a Savings Strategy

how to save up for tuition - savings strategy

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.

Follow the 80-20 Savings Formula

The 80-20 rule is a savings formula based on Pareto’s Principle or “the law of the vital few.” Using the 80-20 formula, you’ll base your budget on your take-home income, after taxes and other expenses are deducted from your salary.

This formula simplifies the saving process by splitting off 20% of your income into savings. The remaining 80% is allocated to 50% for your needs and 30% for your wants.

While it may be difficult to separate your needs and wants, the 20% you take away from your monthly income is an absolute for when you’re saving for your child’s education.

On a take-home income of PHP 50,000, the amount that goes into your child’s education fund each month is PHP 10,000. This amount, multiplied by 15 or 16 years, will give you a total of PHP 1.8 to 1.92 million.

The possible costs per year exceed this amount, with the average costs for a year getting closer to PHP 1 million. This means that a simple savings plan won’t be enough and that you need to find other ways to grow your money to provide for your child’s entire schooling.

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3. Invest Your Money

Saving money in a regular bank account 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.

Best Investments for Building a College Tuition Fund

how to save up for tuition - best investments for education

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.

Most education plans feature a small first investment amount, usually around PHP 20,000. Essentially, two months’ worth of savings will allow you to start building the fund.

Many companies that offer education plans also provide ways of growing the fund beyond the minimum requirement for your child to complete their degree. Some of these products include a life insurance policy or further investment growth options.

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 to invest in.

Pag-IBIG MP2 Savings

Take advantage of additional savings program from Pag-IBIG that earns higher dividends, which you can receive every year or after five years.

For just a minimum remittance of PHP 500 per month, you have the option to boost your savings with an amount that suits your budget. Compared to your regular Pag-IBIG Fund savings, MP2 savings earn higher dividends. They’re also tax-free and government-guaranteed.


Because you have more than 10 years to save up for tuition, 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,[4] 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 in your child’s future.

5. Track Your Progress

Building a tuition fund is a continuous rather than a one-time process. From time to time, evaluate your savings and investment strategies, as well as 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 your tuition fund’s progress regularly also lets you know if you need to put more money into it.

How to Save Up for Tuition Faster

Got little time to build your child’s college tuition fund? Or you want to achieve this financial goal the soonest time possible? Here are some tips to help you save for tuition faster.

1. Consider All Costs When Setting Your Target Amount 

how to save up for tuition - tips to grow college fund faster

There’s no way to know what field of study your child will pursue when he or she grows up. But what your child wants to take up in college will significantly impact how you’ll save up for college tuition.

This is why you need to consider all the costs associated with studying medicine, engineering, law, film, and other expensive courses when setting a savings goal. Hence, it’s better to overestimate than underestimate when it comes to setting a tuition goal amount.  

2. Teach Your Child the Value of Education 

A good education is one of the most important things a person can have. Make sure that your child knows this. While you’re at it, teach him or her the importance of knowing how money works in their lives, even at a young age. A money-smart child results in a financially aware and independent adult.

Involve your child in the whole saving process. Encourage them to put in cash gifts from godparents and relatives into their own tuition fund. This will train them on financial responsibility at an early age as well.

3. Boost Your Child’s Tuition Fund Whenever You Can

Add more money to your child’s tuition fund each time you receive a bonus, no matter how big or small. Put in money regularly whenever you have extra, and the amount will accumulate over time. As much as possible, don’t touch this fund until your child needs to use it for college.

4. Consider Your Career and Salary Trajectory

As your child grows, so should your salary or income. Find additional income sources to help with your education fund building. To do this, improve your skills or learn new ones that will help you land bigger, better, and higher-paying roles at work. You can even start a small business with low capital. There are so many options that you can explore!

Read more: 26 Free Online Courses for Thriving and Future Entrepreneurs

5. Avail of a Personal Loan

If you’ve got little time to save, 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.

You can also charge tuition fees and other school expenses on your credit card. Repayments will be easy on your budget with fixed loan terms and low interest rates.

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

Read more:

6. Just Start Saving!

No matter how much it is, just save it. What’s important is that you start saving. It must become an automatic part of your process each time you receive your paycheck. From there, you have many ways to grow what you save into a viable source for your child’s education.

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.

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