Blog

Saving for Education: How to Build a Fund for Your Child

Estimated reading time: 5

Saving for Education: How to Build a Fund for Your Child

Your child may be starting grade school, preparing for senior high school, or still years away from college. You may want them to have more school choices later. At the same time, food, housing, utilities, transportation, and other family needs already take up much of your monthly budget.

An education fund does not need to start with a large deposit or cover every future expense. Start with the next school expense you expect to pay and an amount you can set aside regularly. Even a partial fund can reduce how much you need to cover from your regular income when enrollment begins.

How to start saving for education

You can begin with these steps:

  1. List tuition fees and other school expenses
  2. Note when each payment will be due
  3. Estimate how much the costs may increase
  4. Subtract what you have already saved
  5. Divide the remaining amount by the months left
  6. Keep the money where you can access it when needed
  7. Update the plan when fees, income, or school plans change

What is an education savings account?

The term education savings account does not mean the same thing everywhere. In some countries, it is a specific account or government program with rules on how much you can put in and what it can pay for. In the Philippines, parents may also use the term for any money set aside for education, even if the account itself was not created for that purpose.

In this article, it means money kept separately for future school costs. You might use a regular savings account, a time deposit, an investment, or combine two or more of them.

Why start saving for education early?

Whichever option you use, starting early means you can save smaller amounts over more months. Having more time also makes it easier to adjust if tuition and other school fees rise, your child’s plans change, or your budget becomes tight.

If you are starting later, focus first on 1 semester’s tuition, a laptop, or another specific cost. Saving for one expense first can still reduce the amount you need to cover all at once.

What should your education fund cover?

Your estimate should include more than tuition. What else to add depends on your child’s age, school, course, and whether they will study away from home. An education savings fund may also cover:

  • Tuition and other school fees
  • Books and school supplies
  • Uniforms and shoes
  • Transportation and allowance
  • A laptop, tablet, internet connection, or other learning tools
  • Projects, laboratory work, field trips, and practicum expenses
  • Graduation and application fees
  • Rent, food, and travel if your child studies away from home

If you are saving for more than one child, set a separate savings goal for each one and note when the payments are due. Their schools, courses, and enrollment dates may differ. One combined total can make it harder to see how much you still need for each child.

How much should you save for education?

Every family will have a different savings goal. Yours depends on the school, the time left, the expenses you want to cover, and what you can regularly set aside.

Estimate your child’s future school costs

Ask the schools your family is considering for their latest schedule of tuition and other fees. Include miscellaneous and laboratory fees, then add supplies, transportation, allowance, devices, and housing if your child may study away from home.

Education costs often increase over time. This is sometimes called education inflation. No single rate applies to every school, so use a reasonable yearly estimate and update it when a new fee schedule becomes available. Past schedules may show how costs have changed.

You do not need an exact amount to begin. Use this formula for a first estimate:

Estimated future cost = current cost × (1 + estimated yearly increase)ⁿ

The current cost is today’s price. The estimated yearly increase is how much you expect the cost to rise, written as a decimal, so 5% becomes 0.05. The number 1 represents the original 100% of the cost. The letter n is the number of years before you need to pay.

Suppose 1 year of school costs ₱100,000 today and you expect the cost to rise by 5% each year. If you expect to pay for it 5 years from now, the calculation is:

₱100,000 × (1 + 0.05)⁵ = ₱127,628 (rounded)

The small raised number 5 means the increase is counted once for each of the 5 years. After the first year, the estimated cost is ₱105,000. The next increase is based on ₱105,000 rather than the original ₱100,000.

This formula estimates one future payment. If you are preparing for several years of college, calculate each school year separately based on when you expect to pay it, then add the amounts. You may also set aside a little extra for costs that are difficult to predict.

Calculate how much you can save each month

Once you know how much you want to save, estimate the monthly amount with this formula:

Monthly savings amount = (total amount you want to save − amount already saved for education) ÷ months left

Suppose you want to save ₱600,000, you have already saved ₱60,000, and the expense is due in 10 years. 10 years is 120 months, so the calculation is:

(₱600,000 − ₱60,000) ÷ 120 = ₱4,500 a month

This example does not include interest earned or changes in investment value. It is not a recommended amount.

If ₱4,500 is too much for your budget, focus on the expense you need to cover first, such as 1 semester’s tuition, a laptop, or first-year fees. Calculate a monthly amount for that expense and increase it later if your income rises or another regular expense ends.

How to build your education savings fund

Once you know how much to save each month, decide when you will set it aside.

Keep your education savings separate

A separate account shows how much you have saved without mixing it with everyday expenses. Keep your emergency fund separate too, so an unexpected cost does not force you to use the money set aside for school.

Save on a regular schedule

Set aside the money on payday or the day your business income usually arrives. If your bank allows scheduled transfers, set one up so your savings do not depend on what is left at the end of the month.

Your monthly savings do not have to stay the same forever. Increase them when your income rises or another regular expense ends.

Save part of any extra income

If you can spare part of your 13th-month pay, bonus, commission, cash gift, or side income, decide how much to add before you receive it. Treat it as extra savings rather than money your regular plan depends on.

Review your savings goal regularly

Check the plan when the school releases a new fee schedule, your child changes schools or courses, your income changes, or your child plans to study away from home. If your situation stays the same, check it once a year.

As enrollment or a tuition due date approaches, write down each due date and how much you will need.

Where can you keep your education savings?

Those dates will help you decide where to keep the money. Money you need soon should be easy to withdraw. For school expenses that are still several years away, you can consider a time deposit or an investment that can rise or fall in value.

Regular savings account

A regular savings account lets you add money regularly and withdraw it for school expenses. It may work well if you save every payday or need the fund within the next few years. Before opening one, check its interest rate, fees, maintaining balance, and how to add or withdraw money.

Time deposit

With a time deposit, you place one larger amount, known as a lump sum, in the account for a fixed term. The money earns interest during that period.

Choose a term that ends before your tuition or other school fees are due. This leaves time to transfer the money and pay the school fees. Check what happens to your interest if you withdraw early. Do not put your emergency fund in a time deposit.

Other long-term options

For money you will not need for several years, you may consider investments. With some insurance products, part of your payment goes toward savings or investments. These options work differently from bank deposits. Investment values may rise or fall, and some products charge fees or require you to keep paying on schedule. If an investment loses value just before enrollment, you may have less than expected for tuition.

How Salmon can help you save for education

Salmon does not offer an account specifically for education. If you want to keep your education fund in a bank account, you can use Salmon Save for money you save regularly. Salmon Time Deposit may suit a lump sum that you do not expect to need until the term ends.

Keep track of your education goal with Salmon Save

Salmon Save is a savings account from Salmon Bank (Rural Bank) Inc. that earns interest. When you open Salmon Save, Salmon also opens a Salmon Daily checking account. You move money between the two accounts in the app.

Salmon Goal is a feature within Salmon Save. After estimating the future cost, you can enter your savings goal and target date. The app shows your progress, how much is left, and how much you need to save each month. Compare the suggested monthly savings with what you can regularly set aside, then update or delete the goal if your costs or plans change. Learn how Salmon Goal works.

Start your education fund with Salmon Save. Salmon Save has no maintaining balance or monthly maintenance fee, and Salmon Goal lets you track your education savings in the app. Open a Salmon Save account

When to consider Salmon Time Deposit

Salmon Time Deposit lets you place a lump sum for a fixed term. Before you open one, check the available terms and how an early withdrawal affects interest and fees. Read how Salmon Time Deposit works. Deposits are insured by PDIC up to ₱1 Million per depositor. Read the current deposit insurance coverage.

Questions to check before you start

  • Can I start with a smaller amount now?
  • Is my education fund separate from my everyday spending and emergency fund?
  • Have I included school costs beyond tuition?
  • Will a fixed term end before the fees are due?
  • Can I keep saving the same amount each month without relying on a bonus or possible investment gains?
  • Am I using the latest school fees?

Frequently asked questions (FAQ)

What is an education savings account?

In this guide, an education savings account means a separate place where you keep money for future school costs. In some countries, the same term refers to a specific program with its own rules.

How do education savings accounts work?

You decide how much you want to save and by when, then add money regularly or whenever your budget allows. The account or investment you choose determines when you can withdraw the money, how its value may change, and what fees, taxes, or risks you need to consider.

Can I use a regular savings account for my child’s education?

Yes, a regular savings account lets you add money over time and withdraw it when school fees are due. Keeping it separate from everyday expenses also makes your progress easier to track.

When should I start saving for my child’s education?

You can start once you can include even a small amount in your regular budget. If your child is younger, you can spread your savings goal over more months. If your child will need the money sooner, begin with the next expense you expect to pay.

What can I use an education savings account for?

You may use the fund for tuition fees, school charges, supplies, uniforms, transportation, allowance, devices, projects, rent, dormitory fees, or other living expenses. If the money is in a time deposit or another product with rules on when you can withdraw it, check when it will be available.

Can I use a time deposit for my child’s education?

Yes, a time deposit may work for part of the fund if you will not need the money until the term ends. An early withdrawal may reduce the interest you earn or mean you have to pay a fee, so review the current terms before opening one.

21.09.2026