College Savings Calculator
What saving from birth actually builds
Why starting early matters so much
The advantage of saving from birth is time, and time works non-linearly. Money invested at birth has eighteen years to compound; money invested at age ten has eight.
Concretely: saving $150 a month from birth at a 6% return produces roughly $58,000 by age 18. Starting the same $150 a month at age nine produces about $22,000 — less than half, despite saving for half as long. The missing portion is not the contributions; it is the growth those early contributions would have generated.
This is why even a modest amount started early frequently beats a much larger amount started later.
The formula
This is a future-value-of-an-annuity calculation with a lump sum added:
Where PV is what you have already, PMT is the monthly contribution, r is the monthly return, and n is the number of months. The first term grows your existing savings; the second accumulates the monthly deposits and their growth.
The inflation problem
Education costs have historically risen faster than general inflation in many countries, which makes fixed targets misleading.
If costs rise at 5% annually, something costing $40,000 today would cost roughly $96,000 in eighteen years. Saving toward today's price will leave a substantial gap.
The practical response is to set the target in future terms from the start, and to invest rather than save in cash. Cash at low interest loses purchasing power over an eighteen-year horizon with near-certainty, which makes it the higher-risk choice for this particular goal despite feeling safer.
Where to put the money
Options vary substantially by country, and the tax treatment usually matters more than the investment choice.
Many countries offer dedicated education savings accounts with tax advantages — 529 plans in the US, Junior ISAs in the UK, RESPs in Canada with government contribution matching. Where matching or tax relief exists, it is usually the first place to put money, because the return is immediate and guaranteed.
Some accounts transfer control to the child at 18, which is worth understanding in advance. General investment accounts offer more flexibility if the money might be needed for something other than education.
With an eighteen-year horizon, a diversified investment approach is generally appropriate, gradually shifting toward lower-risk holdings as the date approaches — a market fall in year sixteen is far harder to recover from than one in year three.
Keeping it in proportion
One thing worth saying plainly: education saving should come after your own financial security, not before it.
An emergency fund, high-interest debt, and adequate retirement saving all reasonably come first. There are loans, grants, scholarships, and part-time work available for education. There is nothing equivalent for retirement, and a parent without retirement savings eventually becomes a financial responsibility for the same child.
Partial funding is also a legitimate goal. Covering half of the expected cost is a substantial contribution and considerably better than nothing, and framing it that way makes the target achievable rather than paralysing.
Common Questions
How much should I save for my child's education?
It depends entirely on where and what they study, and whether you aim to cover all or part of the cost. Partial funding is a perfectly reasonable goal, and covering half is a substantial contribution.
Why does starting early matter so much?
Because growth compounds over time. Saving $150 a month from birth at 6% produces roughly $58,000 by 18, while starting at age nine produces about $22,000 - less than half, for half the time.
Should I save in cash or invest?
Over an eighteen-year horizon, cash at low interest loses purchasing power almost certainly, particularly as education costs have historically risen faster than general inflation. A diversified investment approach is generally appropriate, shifting to lower risk as the date nears.
Should I prioritise education savings over retirement?
Generally no. There are loans, grants, and scholarships for education, but nothing equivalent for retirement. Your own financial security reasonably comes first.