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It is best to be prepared to pay for tuition on an annual basis because:

1. You are sure you will not spend the money. It is so easy to "borrow" the tuition fee for some other expense and you might end up with nothing to cover for it when it is time to pay.
2. You might forget to pay for the installment and when you forget, you will probably be charged a late payment fee. Furthermore, you or your child might be embarrassed. Schools usually check on non-paid accounts right before an important exam.

However, like most, you are probably more aware of having a monthly budget. If you really pay tuition monthly, then it is part of your monthly budget. However, in many cases, tuition paid annually or semi-annually is sometimes forgotten. Then, when payment is due, there is a last minute panic and the money comes out of an emergency fund, or borrowing from relatives and friends or even from a credit card. YOU DON’T WANT THIS TO HAPPEN!  

Consider setting up a separate bank account to handle quarterly, semi-annual, or annual expenses like tuition fees. When you make your monthly budget, include these expenses as well as part of the monthly budget. For example, if you have to pay PhP60,000 for tuition for the whole school year, make sure you include PhP5,000 in your monthly budget. Deposit the PhP5,000 monthly in that separate bank account.   

Do not be tempted to touch that money for anything else. If you plan for this monthly expense, you will automatically give up expenses for things that you want but do not really need, knowing that you do not have the money. In this way, you will be practicing a derivative of the equation I am always reminding everybody about: Income less Savings = Expenses. In this case, you will have Monthly Income less Savings (10-20%) less Tuition Budget = Expenses allowed for the month.

If opening several bank accounts is too difficult, another way to ensure you are able to follow your budget is to use an "envelope" system. For example, as soon as you have the cash, immediately distribute them in different envelopes marked with specific labels, e.g. tuition, groceries, etc. This way, you will be reminded to keep your expenses within budget.

You can use this same system for other quarterly, semi-annual or annual expenses like taxes, association dues and the like. I know it works because I have received so many emails thanking me for opening their eyes to the fact that they can save and be ready for their necessities. 

FRANCISCO J. COLAYCO is an entrepreneur, a venture developer and financial advisor. He has over 40 years of experience that covers service contracting in the Middle East, manufacturing, trading construction, shipbuilding, management consulting, banking and financial services. He is the Chairman of the Colayco Foundation for Education (CFE) and the author of bestsellers: Wealth Within Your Reach (2004 National Book Award for Business and Economics), Making Your Money Work (Nominated in 2005, National Book Awards Business and Economics), Pera Palaguin Workbook and Money for Kids. The books are available at National Bookstore, most other bookstores or directly from CFE. He joins our website blog to share with ordinary income earners, Overseas Filipino Workers (OFW) and students the simple principles to "Save what you earn and grow what you save." CFE conducts talks, seminars, and workshops. “Managing Personal Finances For The Future” a seminar-workshop developed in partnership with the Ateneo Graduate School of Business, Center for Continuing Education. June 21, 2008, Saturday, 9:00 am to 6:00 pm. For registration and inquiries, please call Marleth Calanog at 830-2050. CFE is also the producer of the PISObilities DVD series, available at your favorite audio-video shops in May 2008. Learn more about the advocacy at http://www.colaycofoundation.com/, email info@colaycofoundation.com, via SMS +63917-8537333 or through (632)637-3741.