{"id":394985,"date":"2025-11-21T16:19:17","date_gmt":"2025-11-21T16:19:17","guid":{"rendered":"https:\/\/www.europesays.com\/us\/394985\/"},"modified":"2025-11-21T16:19:17","modified_gmt":"2025-11-21T16:19:17","slug":"28-year-old-puts-money-away-every-month-for-his-infant-daughter","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/394985\/","title":{"rendered":"28-year-old puts money away every month for his infant daughter"},"content":{"rendered":"

Sebastian Marquez<\/a>‘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.<\/p>\n

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 \u2014 who has been diligently tracking his expenses since 2020 \u2014 pulled out his spreadsheets.<\/p>\n

In his budget, he added categories for future daycare costs and lifestyle expenses like baby clothes, diapers, infant formula and toys.<\/p>\n

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.<\/p>\n

Like a 529 plan in the U.S., a RESP<\/a> 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. <\/p>\n

Sebastian and Julia Marquez play with their seven-month-old daughter and dog.<\/p>\n

Aizick Grimman | CNBC Make It<\/p>\n

The Canada Education Savings Grant<\/a> 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). <\/p>\n

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. <\/p>\n

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.<\/p>\n

In Canada \u2014 where the average undergraduate tuition fee for citizens is just over $4,800 for the 2025-2026 school year, according to government data<\/a> \u2014 the money his daughter will have in her RESP will “be more than enough to sustain her down the road,” Marquez says. <\/p>\n

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.<\/p>\n

How to save for your child’s education in the U.S.<\/p>\n

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.<\/p>\n

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.<\/p>\n

Parents should “open a 529 plan<\/a> as soon as the baby is born, or even before,” Tai Kim, a wealth strategist at Truist Wealth, told CNBC Make It in August.<\/p>\n

Starting in January, 529 account holders will be eligible to use the tax-free money on an expanded list of education<\/a> and training costs, including vocational programs, required continuing education and certain expenses related to licensing programs in law, accounting or finance.<\/p>\n

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. <\/p>\n

“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 \u2014 and the benefits for your children will pay off for decades,” Kate Byrne, head of Vanguard Cash Plus Distribution, told CNBC in August<\/a>.<\/p>\n

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.<\/p>\n

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Plus, sign up for CNBC Make It’s newsletter<\/a> to get tips and tricks for success at work, with money and in life, and request to join our exclusive community on LinkedIn<\/a> to connect with experts and peers.<\/p>\n

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