5 Steps to Save for Your Child’s College Tuition

5 Steps to Save for Your Child’s College Tuition

College may be years away and you've got time on your side. Here's how to start saving now.

9 min read

Parents dream of sending their child to the best college they can afford. With rising inflation, however, that dream comes at a steep price. Don’t despair! Even those who aren’t rolling in money have been able to send their kids to college. It’s all about hard work, scrimping, and saving! 

It doesn’t have to be so difficult, however. Financial consultant, speaker, and trainer Ramon Battung is here to help you figure this out. With these five steps, you can be on your way to saving for your child’s college tuition.

1. Find out how much you need to save for your child’s college tuition.
You need to know your goal so you can plan ways to reach it. Think about the school you’re aiming for and give them a call. Ask about how much it costs to study there. This information will help you decide on many things such as (1) if you can afford this school, and (2) what you need to do to save up for your child’s education.

Battung says, “It’s up to the parents how they want to educate their kids. Some will be okay with a regular college, some would want a prestigious university, while some will want extended education (ex. to become a doctor). Education is one of inevitable things a parent will pay for. As with any future expense, preparing way ahead is the best course of action. If not, then extra sacrifices will be needed to catch up.”

Are you willing to make those sacrifices? There can be financial setbacks, such as a job loss or medical emergency, which will have serious implications on the family budget. So be realistic with your goals and how much money you can set aside regularly.

Here’s how to compute for your target amount:

Current tuition multiplied by 1 plus Interest [P x (1+I)] raised to number of years (N). 

Battung gives an example in case the current annual tuition of your desired college is Php 300,000: “On your phone, just type 300,000 x 1.10 then press the equal sign 8 times. We have just projected that if tuition fees increase by 10% a year for 8 years, then P300,000 today will be around Php 644,000 in 8 years, or around Php 778,000 in 10 years.”

That P778,000 is just for the first year of college. So you’ll still need to add all four years of college to arrive at the final tuition amount, which is Php 3,610,698. 

2. Make a savings plan.
Now that you know how much you need to pay for your child’s college education, you can create a savings plan. To battle feeling overwhelmed, turn that huge amount into bite-sized pieces. Divide the final amount by the years left before college, then divide that number with 12. Now you know how much to allocate every month for your tuition fund. 

Here are a few more suggestions to save up for your child’s tuition:

  • Whenever you get a bonus, add it to your child’s tuition fund.
  • As your income grows, you may also increase the amount you set aside.
  • Ask your child if he or she is willing to put her cash gifts from grandparents and godparents into the tuition fund. It doesn’t have to be the whole amount. If your child declines, that’s okay. After all, college shouldn’t be their responsibility!

Battung says, “The first part is ensuring we allot a specific amount from our income to prepare for college. We can start small and utilize bank products like special savings account and time deposit. Once we build up our funds, we can look at guaranteed income investments like corporate bonds and government securities. Alternatively, we can use Insurance Endowment products. These give us payouts every other year so it can help with expenses.”

3. Find additional income sources.
Take a good hard look at your finances now—what you’re earning and what you’re paying for like rent or mortgage on top of the usual bills and expenditures. Battung says, “If our current situation does not allow us to set aside funds for education, then we should look to do either or both of these: Increase our income or lower our expenses.”

You can increase your income in many ways. You can start by selling some of your old items at home. You can also create new products or offer services. 

4. Save early for your child’s college tuition.
It’s difficult to imagine your little one as a young college student but conjure that image anyway to help galvanize you into action. College can be very pricey! Battung says, “Saving up for college is of course best done as early as possible. Best is once the couple has plans of having children, second best is when they are already pregnant or immediately after giving birth, third best is from age 1 to 5, and so on and so forth.”
Build your tuition fund as early as possible so that your monthly budget for it won’t be too large. 

5. Choose to invest your money.
Even religiously putting money in a regular bank account to save for your child’s college tuition will not be enough because of that annual 10% tuition fee increase. An investment plan will yield higher returns. Talk with a financial planner for your best investment options. Here are the high-yield products you can investigate: 

  • Education Plans
  • Mutual Funds and Unit Investment Trust Funds (UITFs)
  • Variable Unit Life Insurance (VUL)
  • Stocks

There are many variables to help you choose the investment option for you. Does it fit your budget? How comfortable are you with risk? How long do you want to pay? Battung says, “With regard to stocks, I would advise against it especially if the couple doesn't know anything about the stock market. Should they wish to use an equity fund, from UITF, Mutual Fund or VUL, just remember that the stock market is volatile. It is very possible that upon college of our kids, the market is down and thus we might have low income or even none at all.”

College may be a long time away but you’ll need to start preparing for your child’s college tuition now. Combine all possible income sources so that you can be best prepared for your child’s education. Battung concludes, “Building the tuition fund is a continuous rather than a one-time process. From time to time, evaluate your savings and investment strategies with 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.”


The views and opinions expressed by the writer are his/her own, and does not state or reflect those of Wyeth Nutrition and its principals.


About The Writer



Frances Amper Sales is a writer for beauty, lifestyle, and parenting publications. She was the happy editor-in-chief of entertainment title, OK! Philippines, until she made the happier decision to work from home and raise her three sons with her husband, a novelist and editor. While Frances has always enjoyed her career, it was only when she began writing her parenting adventures on her blog, www.topazhorizon.com, that she felt that her writing mattered as thousands of fellow moms and working women shared how her candid and honest stories inspired them to embrace motherhood without pressure and guilt, just love. 





The views and opinions expressed by the writer are his/her own, and does not state or reflect those of Wyeth Nutrition and its principals.

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