The cost of education rarely goes down from year to year. Parents who only start thinking about it when their child is nearly in high school or university are often shocked by the amount they need to find in a short time. The good news is that an education fund for your child can be built in comfortable installments if you start early. The key is not a big income, but clear math and a consistent habit.

Start with a Clear Goal

Before talking numbers, decide what kind of education you want to prepare for. Some helpful questions:

  • At what level and when will your child enter, for example primary school in two years or university in ten?
  • Will it be public, private, or overseas?
  • Is this fund meant to cover all the costs or only part of them, with the rest coming from scholarships or the family's income at that time?

Different goals produce different funding needs. None is wrong, but each needs to be decided so the calculation does not stay vague.

Estimate Future Costs

Education costs today will not equal the cost when your child enrolls, because prices tend to rise. The calculation is simple:

Future cost = current cost × (1 + annual increase) to the power of the number of years

For example, say one stage costs Rp50 million today, your child enters in 10 years, and you assume an 8 percent increase per year. The calculation is 50 million × 1.08 to the power of 10, which comes to roughly Rp108 million. The increase rate is only an assumption for illustration. Ask the school or university you have in mind for current costs, and use a reasonable assumption that you update each year.

Turn It into a Monthly Saving

Once you know the target, divide it by the months remaining. In the example above, Rp108 million over 120 months comes to about Rp900 thousand a month, even before counting any investment return. If the money is placed in an instrument that earns a return, the required monthly deposit can be smaller, but returns are never certain, so do not make them your only reliance.

If the figure feels heavy, there are three paths: start with a small amount and raise it as income grows, extend the timeline, or lower the target and add a scholarship route.

Choose Instruments by Time Horizon

The general principle: the closer the date you need the money, the safer the instrument.

  1. Under 3 years. Savings accounts, time deposits, or money market funds. The aim is to preserve principal, not chase gains. Make sure the bank is licensed and the deposit is insured by LPS.
  2. 3 to 10 years. A mix of low to moderate risk instruments, such as fixed income or balanced mutual funds, matched to your risk tolerance. Values can rise and fall, so understand them before buying.
  3. Over 10 years. A larger share can go to growth instruments, shifting gradually to safer ones as the goal draws near.

No product suits everyone. Check the provider's legal status with OJK, read the risk profile, and do not put all the money into one instrument.

About Education Insurance

Education insurance combines protection and saving. Its strengths are payment discipline and a benefit if something happens to the parent. The drawbacks are charges and withdrawal restrictions early on, plus returns that should be compared with alternatives. Read the policy carefully: what share of each payment actually becomes savings, when it can be withdrawn, and what happens if you stop paying. Another option is to separate protection through term life insurance and saving through a different instrument.

Protect the Foundation First

An education fund will be disrupted if the family has no foundation. Make sure these are already in place:

  • An emergency fund, so sudden needs do not force you to cash out the education fund.
  • Health coverage, so hospital costs do not eat into savings.
  • Paying off high-interest consumer debt, because its interest usually exceeds savings returns.
  • Life protection for the breadwinner, so the education plan keeps going if something bad happens.

Use Other Routes Too

Savings are not the only source. Learn about scholarship and education aid programs, such as KIP Kuliah and scholarships from universities or other institutions, along with their conditions. Your child's grades, achievements, and skills open doors that money cannot buy. But do not hang the whole plan on scholarships, since there is no guarantee of getting one.

Common Mistakes

  • Waiting until the child is older, then having to deposit a large amount all at once.
  • Ignoring rising costs, so the target is too low.
  • Putting short-term money in high-risk instruments.
  • Withdrawing education savings for consumer spending.
  • Not reviewing the plan every year.

Closing

An education fund is lightest when started as early as possible. Your first step this week: decide the level and the target school or university, find an estimate of its cost, work out the future cost using the simple formula above, and divide it into monthly deposits. Then set up automatic payments and review once a year. Small consistency today is worth far more than a big plan that never begins.