The Best Ways to Save for Your Child’s Education
Providing your child with a quality education is one of the best investments you can make in their future. But with the rising cost of tuition, school supplies and extracurricular activities, planning ahead is essential. Whether you're saving for private school fees, university tuition, or additional educational expenses, having a solid savings strategy in place can make all the difference.
In this guide, we’ll explore the best ways to save for your child’s education, including specific savings accounts, investment options and trusts that Australian parents can use to build a strong financial foundation for their child’s future.
1. Why Start Saving Early for Your Child’s Education?
The cost of education in Australia continues to rise, making early preparation crucial. Private school fees can exceed $30,000 per year, while university expenses—including tuition, textbooks, and living costs—can add up quickly. Even if you plan to rely on government support such as HECS-HELP loans, having additional savings can help cover non-tuition costs and reduce financial pressure.
Starting early allows you to take advantage of:
Compounding interest – The earlier you save, the more your money can grow over time.
Investment growth – Longer investment timelines allow for greater returns.
Financial flexibility – Spreading savings over many years prevents last-minute financial stress.
Even small, consistent contributions can accumulate significantly over time, making education savings more manageable.
2. High-Interest Savings Accounts: A Simple and Secure Option
A high-interest savings account is a great starting point for parents who want a low-risk way to build their child’s education fund. These accounts offer secure, accessible funds while earning interest over time.
Choosing the Right Savings Account
When selecting a savings account, consider:
Interest rates – Look for accounts that offer competitive rates to maximise growth.
Access restrictions – Some accounts encourage long-term savings by limiting withdrawals.
Bonus interest conditions – Certain accounts offer extra interest when regular deposits are made.
Top Savings Accounts for Education in Australia
Several banks and financial institutions offer accounts designed for education savings, such as:
Commonwealth Bank Youthsaver – Encourages consistent saving habits for children.
ANZ Progress Saver – Rewards regular contributions with bonus interest.
Bank of Queensland Fast Track Saver – Offers high interest with minimal fees.
While savings accounts are secure, they may not offer the highest returns, making them ideal for short-term savings or emergency education funds.
3. Investment Bonds: A Tax-Effective Way to Save
Investment bonds are a popular long-term savings option for education due to their tax advantages and flexibility. These bonds are structured as life insurance policies with an investment component, allowing your money to grow in a tax-efficient manner.
Why Consider Investment Bonds for Education?
Tax benefits – Earnings are taxed at 30%, often lower than personal marginal tax rates.
10-year rule – If left untouched for 10+ years, withdrawals are tax-free.
Flexible contributions – Parents can add funds over time to grow the investment.
Best Investment Bonds for Education in Australia
Some well-known providers include:
Australian Unity Education Savings Fund
AMP Growth Bonds
Foresters Financial Education Bond
Investment bonds are best suited for parents looking for long-term growth with tax benefits while ensuring funds are dedicated to education expenses.
4. Education-Specific Trusts: Gifting Wealth for Future Education
A family trust or an education trust can be an excellent way to set aside money specifically for your child’s education. These structures allow you to allocate funds in a controlled manner while potentially minimising tax obligations.
Setting Up an Education Trust
Discretionary family trusts – Allow parents or relatives to set aside assets for a child’s education while maintaining control over distributions.
Testamentary trusts – Useful for estate planning, ensuring funds are used solely for education if something happens to you.
While trusts offer flexibility and tax advantages, they can be complex and require legal and financial advice to set up correctly.
5. Investing in Shares and ETFs: Long-Term Growth Potential
For parents willing to take on more risk in exchange for higher potential returns, investing in shares or exchange-traded funds (ETFs) can be an effective way to build an education fund.
Benefits of Investing for Education
Higher returns – Over the long term, investments in diversified assets tend to outperform traditional savings accounts.
Flexibility – Funds can be accessed when needed for tuition or related costs.
Compounding growth – Reinvesting dividends can help accelerate savings.
How to Start Investing for Your Child’s Education
Choose a brokerage account – Platforms like CommSec, SelfWealth, or Vanguard Personal Investor allow easy investment access.
Invest in diversified ETFs – Consider low-fee ETFs that track the ASX 200 or global indices for steady growth.
Make regular contributions – Even small, consistent investments can grow significantly over time.
Investing in shares is best for parents with a long-term horizon (10+ years) and an appetite for some market fluctuations.
6. Government Support & Grants: Extra Help for Parents
While personal savings play a crucial role, don’t overlook government assistance programs that can help with education costs.
Government Schemes and Support
HECS-HELP Loans – Covers university tuition for eligible students, reducing upfront costs.
Centrelink Assistance – Certain families may qualify for Youth Allowance or Family Tax Benefits.
Saver Plus Program – A matched savings program that helps low-income families save for education expenses.
Understanding available government support can help reduce out-of-pocket costs while making higher education more accessible.
7. Smart Strategies to Maximise Your Child’s Education Savings
Regardless of the method you choose, adopting smart savings habits can help accelerate your progress.
Top Tips for Parents:
Start early – The sooner you begin, the more time your savings and investments have to grow.
Set up automatic transfers – Make regular contributions to your child’s education fund.
Review and adjust your strategy – As your child grows, reassess your savings plan to ensure it aligns with education costs and investment goals.
Diversify your savings methods – Combine savings accounts, investment bonds, and ETFs to balance risk and growth.
By implementing these strategies, you’ll be well on your way to securing your child’s future education.
Conclusion: Planning Today for a Brighter Tomorrow
Investing in your child’s education is one of the most impactful financial decisions you can make. Whether you choose a high-interest savings account, investment bonds, a family trust, or shares, the key is to start early and stay consistent.
By planning ahead, you can ensure that when the time comes, your child has the financial support they need to pursue their education without unnecessary financial stress.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial, tax, or investment advice. We recommend speaking with a qualified financial adviser before making any decisions regarding your superannuation. Every individual’s financial situation is unique, and personalised advice is essential to ensure the best outcome for your specific circumstances.
