When my first child was born, I sat down with a calculator and a cup of coffee and figured out what it would actually take to pay for college. Not the theoretical version — the real version. The one where you start with what you can actually afford and let time do the heavy lifting.
The answer was $3.57 a day. That's it. Less than a latte. Less than a drive-through lunch. Less than most of the things we spend money on without thinking about it.
I've been following this plan for 14 years now, and it works. Not in theory — in practice, in a real brokerage account, with real money that's actually growing. Here's the whole thing, laid out so you can do it too.
The Plan: Start Small, Build Steadily
The concept is embarrassingly simple:
- Year 1: Save $25 per week ($3.57/day)
- Every year after: Increase your weekly contribution by $5
- Invest it: Put it in a low-cost S&P 500 index fund
- Don't touch it: For 18 years
That's the whole plan. No complicated spreadsheets. No financial advisor taking 1% off the top. No "set it and forget it" robo-advisor with monthly fees. Just a weekly transfer that goes up by five bucks every January.
The magic isn't the amount — it's the consistency. $25/week feels manageable for most families. The $5/year increase tracks roughly with typical raise amounts, so it never feels like a stretch. And 18 years of compound growth turns a modest savings habit into a serious college fund.
The Numbers: Year by Year
Here's the full contribution schedule assuming a 7% average annual return (the conservative end of historical S&P 500 performance). These numbers use start-of-year contributions with full annual compounding:
| Year | Weekly | Daily | Annual | Total Invested | Projected Balance |
|---|---|---|---|---|---|
| 1 | $25 | $3.57 | $1,300 | $1,300 | $1,391 |
| 2 | $30 | $4.29 | $1,560 | $2,860 | $3,158 |
| 3 | $35 | $5.00 | $1,820 | $4,680 | $5,326 |
| 4 | $40 | $5.71 | $2,080 | $6,760 | $7,924 |
| 5 | $45 | $6.43 | $2,340 | $9,100 | $10,983 |
| 6 | $50 | $7.14 | $2,600 | $11,700 | $14,534 |
| 7 | $55 | $7.86 | $2,860 | $14,560 | $18,611 |
| 8 | $60 | $8.57 | $3,120 | $17,680 | $23,252 |
| 9 | $65 | $9.29 | $3,380 | $21,060 | $28,497 |
| 10 | $70 | $10.00 | $3,640 | $24,700 | $34,386 |
| 11 | $75 | $10.71 | $3,900 | $28,600 | $40,966 |
| 12 | $80 | $11.43 | $4,160 | $32,760 | $48,285 |
| 13 | $85 | $12.14 | $4,420 | $37,180 | $56,395 |
| 14 | $90 | $12.86 | $4,680 | $41,860 | $65,350 |
| 15 | $95 | $13.57 | $4,940 | $46,800 | $75,210 |
| 16 | $100 | $14.29 | $5,200 | $52,000 | $86,039 |
| 17 | $105 | $15.00 | $5,460 | $57,460 | $97,904 |
| 18 | $110 | $15.71 | $5,720 | $63,180 | $110,877 |
Total out of pocket: $63,180. Projected value at a conservative 7%: $110,877. That's $47,697 in growth — money that came from absolutely nowhere except patience.
And here's the kicker: the S&P 500 has historically returned closer to 10% annually over long periods. At 10%, this same plan projects to over $140,000. At 8%, you're looking at roughly $120,000.
Why Year 14 Is Highlighted
That's where I am right now. Fourteen years in. My oldest starts looking at colleges in four years, and the account is sitting at roughly what the table says it should be. The plan actually works.
I won't pretend the last 14 years were smooth. The market crashed in 2020. It dipped hard in 2022. There were months where the balance went backwards. But I kept making the weekly transfer, because that was the deal I made with myself when my kid was born.
The hardest part of this plan isn't the math. It's not touching the money when the market drops 20% and every headline tells you the sky is falling.
Where to Put the Money
| Account Type | Tax on Growth | Rollover Option | Best For |
|---|---|---|---|
| 529 Plan | Tax-free for education | $35k to Roth IRA (SECURE 2.0) | Most families — default choice |
| Roth IRA | Tax-free | Contributions withdrawable anytime | Uncertain education plans; dual purpose |
| UGMA/UTMA Custodial | Taxable (kiddie tax may apply) | No — child owns it at 18–21 | No education restriction needed |
| High-Yield Savings | Taxable interest | N/A | Short-term savings, near-college years |
One often-overlooked 529 benefit since SECURE 2.0 (2024): if your child gets a scholarship or doesn't use the full 529 balance, you can roll up to $35,000 of unused funds into a Roth IRA in the beneficiary's name — tax-free. The account must be 15+ years old. So opening a 529 the day your child is born isn't just about college; it starts a 15-year clock toward a retirement boost for your kid, regardless of their education path.
— Andrew, Financial Analyst
You have two main options:
Option 1: A 529 College Savings Plan
Tax-advantaged growth. Withdrawals for education expenses are tax-free. Many states offer a tax deduction on contributions. The downside: the money must be used for education, or you'll pay penalties.
Option 2: A Regular Brokerage Account
No tax advantages, but complete flexibility. If your kid gets a scholarship, starts a business, or decides college isn't for them, the money is still yours to use however you want. You'll pay capital gains tax on the growth, but you'll never be penalized for using it "wrong."
I went with a mix of both — roughly 70% in a 529 and 30% in a regular brokerage account as a hedge. Your situation might be different.
The Investment: Keep It Simple
One thing people miss about the $3.57/day plan: the $5/week annual increase is intentional. It mirrors average wage growth (roughly 3–4%/year). Most people never feel it — but that escalation takes you from
The Investment: Keep It Simple
,300/year in year one to nearly $5,000/year by year 18. The math works because the increases are both modest and compound alongside the balance simultaneously.— Andrew, Financial Analyst
Pick a low-cost S&P 500 index fund and stop thinking about it. Here are the ones I'd recommend:
- Vanguard S&P 500 ETF (VOO) — 0.03% expense ratio
- Fidelity 500 Index (FXAIX) — 0.015% expense ratio
- Schwab S&P 500 Index (SWPPX) — 0.02% expense ratio
The differences between these are negligible. Pick one. Automate your weekly contribution. Go live your life.
What If You're Starting Late?
The table above assumes you start when your child is born. But what if they're already 5? Or 10?
Start anyway. Even 8 years of this plan (starting at year 1 levels) gets you to roughly $23,000 at 7%. That's not $110k, but it's a meaningful dent in tuition. And you can accelerate by starting at a higher weekly amount.
If your child is 10, consider starting at $50/week instead of $25. Eight years at that rate with $5 annual increases projects to about $35,000-$40,000. That's a year of in-state tuition at many universities.
You don't need a financial advisor. You don't need a complicated plan. You need $25 a week, a little bit of discipline, and 18 years. The math is boring. The result is not.
Start This Week
Open a brokerage account or a 529. Set up a $25 weekly automatic transfer. Buy shares of an S&P 500 index fund. Put a reminder in your calendar for January to bump it up by $5.
That's it. That's the whole article. The rest is just time.
Frequently Asked Questions
Q: When is the best time to start saving for college?
A: The day your child is born. With 18 years of compound growth, even $25 a week becomes $100,000+. Starting late doesn't mean giving up — it means contributing more per week or setting a smaller goal. Any amount invested today beats waiting.
Q: Should I use a 529 plan or a regular brokerage account for college savings?
A: Both work — the choice depends on your flexibility needs. A 529 gives you tax-free growth for education expenses and potential state tax deductions on contributions. A regular brokerage account has no restrictions on how the money is used. A mix of both (roughly 70/30) hedges against your child not attending college.
Q: What if my child gets a scholarship and doesn't need the 529 money?
A: 529 funds can be transferred to another family member, used for graduate school, or — starting in 2024 — rolled into a Roth IRA (up to $35,000 lifetime limit). If you withdraw for non-education purposes, you'll pay income tax plus a 10% penalty on the earnings only, not the principal you contributed.
Key Takeaways
- $25/week starting at birth — increased by $5/year — grows to ~$75,000+ by age 18 in a low-cost index fund (7% avg return).
- A 529 plan makes every dollar work harder. Tax-free growth means your contributions go further than in a taxable account.
- Start the clock immediately. The 15-year clock for Roth IRA rollovers (SECURE 2.0) starts when you open the 529, not when the child is born.
- The plan works because of escalation. $5/week more each year keeps the savings rate growing without feeling painful.
