Family finances
Children's education fund: how to calculate the target and set it aside
Education costs rise faster than general inflation. Here's how to calculate targets by level and set aside monthly without disrupting family cash flow.
Updated 9 November 2026 · FamConnect
The most common mistake in preparing an education fund isn't saving too little, but saving without a target. Parents note down a figure that feels heavy today, then stop after a few months because other needs press in. Those who succeed usually do the opposite: calculate the final number first, break it into small monthly deposits, then let time do the work.
Start from the cost when the child enrolls, not today's cost
If your child is now 3 years old and will enter university at 18, there are still 15 years to go. Today's tuition cost is irrelevant; what matters is the cost 15 years from now. With education costs rising 10% per year — a figure often used because education costs have historically risen faster than general inflation — today's cost multiplies about 4.2 times in 15 years.
| Time remaining | Cost multiplier |
|---|---|
| 5 years | 1.61× |
| 10 years | 2.59× |
| 15 years | 4.18× |
| 18 years | 5.56× |
That table explains why delaying 3–4 years is very expensive: the cost multiplier rises while the number of saving months shrinks. The two move in opposite directions.
Three components that must be included
- 1The entrance fee — usually paid once, and this is precisely what most often drives families into debt, because it arrives as one large bill.
- 2Annual costs during study — tuition, lab fees, books, transport, and living costs if the child moves away.
- 3Cost increases during study — schools and universities raise tuition almost every year, so the fourth-year cost is not the same as the first year's.
How to set aside money that lasts
These three practices distinguish a plan that works from one that stops in the fifth month:
- Separate the account. Education funds mixed with daily accounts almost always get spent. Use one dedicated account, with no debit card.
- Automate on payday, not from what's left over. What's set aside later is usually zero.
- Increase the deposit every year at least by inflation. Otherwise, the target calculated today will fall short when the child actually enrolls.
If the funds aren't enough when the child enrolls
This happens often and isn't a failure. The healthiest order: choose a more affordable level or track first, then switch tracks after the first year; apply for scholarships and financial aid; only then consider a loan, and only if the installment doesn't exceed 20% of income.
Avoid taking a loan with your house as collateral for tuition. The risk isn't worth it: default means losing the whole family's home.
Enter the school's figure you've received and see the monthly deposit.
Open the education fund calculatorFrequently asked questions
Is education insurance necessary?
Not mandatory. Education insurance combines protection and savings, but its cost is generally higher. If the main need is life protection, term life insurance is cheaper and the remaining funds can be saved on your own.
What percentage of income is reasonable for an education fund?
There's no single number. A practical guideline: total long-term savings (education, retirement, house) should not exceed 30% of income, and the emergency fund should be filled before adding commitments.
What if the child wants a more expensive major?
Calculate two scenarios from the start: a base target and an aspirational target. Treat the difference as a backup plan, not the main target — so the monthly deposit stays realistic.