You've dreamed of your child attending college, but have you planned for it?

Knowing your options and setting your goals are essential to creating an effective college savings plan. In this section, you'll learn:

  • How even small contributions on a regular basis can compound over time
  • The myths and realities of 529 college saving
  • What you might need to save for college

Make your plan automatic.

To make the most of your time horizon and the power of compounding, consider putting college savings on autopilot through recurring contributions or payroll direct deposit.1

The sooner you start, the more you could save, as the chart below shows:

Bar chart: The Importance of Saving Early

As you can see in this hypothetical chart, if an account owner began to save $50 a month when a child was 1 year old (with an initial contribution of $250), a 529 college savings plan could potentially have an account worth $16,494 by the time the child was college age.2

1A plan of regular investment cannot assure a profit or protect against a loss in a declining market.

2The hypothetical example assumes college begins at age 18 and is based on a 5 percent rate of return compounded annually, and is for illustrative purposes only. It does not reflect an actual investment in any particular 529 plan or taxes, if any, payable upon distribution.