Sebastian Marquez‘s daughter is just seven months old. She can’t walk or talk quite yet, but her net worth could be six figures by the time she turns 18.
Finding out his wife was expecting “was one of the best things in life,” says Marquez, who is based in Strathroy, Ontario. Soon after, the 28-year-old — who has been diligently tracking his expenses since 2020 — pulled out his spreadsheets.
In his budget, he added categories for future daycare costs and lifestyle expenses like baby clothes, diapers, infant formula and toys.
Another budget line: $150 a month toward a Canadian government-sponsored Registered Education Savings Plan he opened for his daughter, he says. All figures have been converted from CAD to USD unless otherwise stated.
Like a 529 plan in the U.S., a RESP is a specialized education savings account for parents in Canada that offers tax-free growth on investments. Money from the account must be spent on eligible expenses related to post-secondary education, and instead of offering tax-free withdraws like 529 plans, RESP holders may be eligible for government grants that match contributions up to a certain percentage.
Sebastian and Julia Marquez play with their seven-month-old daughter and dog.
Aizick Grimman | CNBC Make It
The Canada Education Savings Grant that Marquez receives offers a 20% match on every $1,795.60 (2,500 Canadian dollars) he contributes every year, with a lifetime maximum contribution of around $5,200 (7,200 Canadian dollars).
Marquez says he does all his own investing, opting for index funds traded on the Toronto Stock Exchange, including ones that track the S&P 500, Nasdaq and other U.S. equities. He estimates his investments will have a 12% annualized average rate of return over the next 18 years given the historical performance of these funds, he says.
His daughter will have around $134,000 saved in her RESP account by her 18th birthday, according to CNBC Make It calculations, assuming a 12% annual rate of return, Marquez’s $150 monthly contributions and the government savings grant. With a more conservative return rate of 7%, the total saved would be around $68,000.
In Canada — where the average undergraduate tuition fee for citizens is just over $4,800 for the 2025-2026 school year, according to government data — the money his daughter will have in her RESP will “be more than enough to sustain her down the road,” Marquez says.
Any money left over in the account after education expenses can be transferred to a different beneficiary, like his daughter’s future kids, or withdrawn, though investment growth may be subject to income taxes.
How to save for your child’s education in the U.S.
There are a number of ways for parents in the U.S. to save for their child’s college education, but many experts recommend opening a state-sponsored, tax-advantaged savings plan called a 529 account.
Generally, these plans let you invest money that’s already been taxed as income, allowing it to grow tax deferred and be withdrawn tax-free when used for qualified education expenses. All 50 states offer at least one type of 529 education plan, except Wyoming.
Parents should “open a 529 plan as soon as the baby is born, or even before,” Tai Kim, a wealth strategist at Truist Wealth, told CNBC Make It in August.
Starting in January, 529 account holders will be eligible to use the tax-free money on an expanded list of education and training costs, including vocational programs, required continuing education and certain expenses related to licensing programs in law, accounting or finance.
Leftover funds in a 529 account can be rolled into a Roth individual retirement account, transferred to a family member, used to pay off student loans or withdrawn outright. However, earnings not used for eligible expenses may be subject to income tax and penalties.
“If you have the means, and you’ve done the emergency savings thing, you’ve put away money for retirement, looking at 529 accounts can be a huge benefit for parents — and the benefits for your children will pay off for decades,” Kate Byrne, head of Vanguard Cash Plus Distribution, told CNBC in August.
All amounts are in U.S. dollars, converted from Canadian Dollars at the OANDA exchange rate of 1 CAD to 0.71824 USD on Sept. 30, 2025.
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