How much should I save for my kid each month? Start age beats amount

Everybody has heard that starting early matters.

Almost nobody has been shown the number, which is why it stays a slogan instead of a reason to open something this weekend.

Does a dollar a day add up to anything?

2 people. Both at 7% nominal, compounded monthly. Both stop at 65. No raises, no windfalls, no lucky decade.

• Your kid. A dollar a day from birth to 18. Then nobody adds another cent and it sits until 65.
• You. $10 a day, every day, starting at 38, all the way to 65.

Your side lands near $291,100.

So the kid wins, on about 1/15th of the money. $98,550 divided by $6,570 is exactly 15.

Start your $10 a day earlier and the result flips. From 35 it reaches about $371,100, ahead of the kid. From 36 it reaches about $342,500, just short. 36 is the age your $10 stops winning.

The mechanics: a dollar a day is $365 a year, or $30.42 a month. 216 months at 0.5833% a month is $13,101 at 18. Left alone for the next 564 months at the same rate, that becomes $348,325. Your $10 a day is $304.17 a month for 324 months, so $98,550 in and $291,120 at 65.

Correction, Sep 16, 2026: an earlier version said the kid ends with about $315,000. That figure compounded the 47-year hold once a year, while the rest of the article compounds monthly. Run consistently, it is about $348,300, and the catch-up amounts below changed with it.

How much do I need to save if I start later?

The honest version of this is not "a dollar beats $10." It is an exchange rate, and it moves fast.

Here is what it takes, per day, to reach the same $348,325 at 65 when the money starts going in at a later age and keeps going in until 65.

A dollar a day from birth is worth about $6.36 a day starting at 30. Or $9.39 a day starting at 35. Or $14.14 a day starting at 40.

Every year of waiting pushes the price of catching up higher. Which is the part nobody says plainly, because "start early" fits on a bank poster and "here is what 5 years of waiting costs in dollars" does not.

None of that means a kid who is already 5 missed it. A dollar a day from 5 to 18 reaches $7,705 at 18 and about $204,900 at 65. From 10 to 18, it is $3,899 at 18 and about $103,700 at 65. Smaller, and still a number most of us would take.

How much should I save for my kid each month?

There is no single right number, and we are not going to pretend there is. What we can show is what each monthly amount does from birth to 18 at the same 7%.

At 7% over 18 years, every row roughly doubles what went in. The start date sets that multiple. The monthly amount only scales it.

Fees come off the top of that 7%. We ran what a few tenths of a percent do to $150 a month in the 529 fee article, and it is about $3,000 by 18.

How much should I save for college per month?

This one runs the math backward. Start with the balance wanted at 18, then solve for the monthly deposit.

Same 7%, same monthly compounding. The only thing that changes is how many months are left.

Starting at 10 instead of birth more than triples the monthly price of the same $50,000. A kid who is already 10 still gets there. It costs $390.02 a month instead of $116.08.

What if 7% is wrong?

It will be. The only question is in which direction.

For context, the S&P 500 with dividends returned a geometric average of about 10.0% a year from 1928 through 2025, and about 10.3% from 1996 through 2025. Those are nominal figures from Aswath Damodaran's historical returns table at NYU Stern, dated January 2026, before fees and before inflation.

We use 7% on purpose. It leaves room for fees, for a portfolio that is not 100% stocks, and for a 65-year stretch that does not match the last 98 years.

Here is the same dollar a day from birth, left alone to 65, at 3 rates. At 5% it reaches about $110,800. At 7% it is about $348,300. At 10% it is about $1.97 million.

That spread is the honest part. The return assumption moves the total a lot. It does not move the conclusion, because every start age in the table above faces the same rate.

None of these numbers adjust for inflation either. $348,300 in 65 years will buy a lot less than $348,300 buys today.

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How do I invest for my baby?

Investing for a baby starts with the account. The math above does not care which account holds the money. Taxes and control do, and those 2 things decide whether the money survives to 65.

The 529 is built for school, and a 47-year hold to 65 is not what it is for. It does have 1 retirement exit: after the account has been open 15 years, up to $35,000 over the kid's lifetime can roll into the kid's Roth IRA. Money added in the last 5 years does not qualify, and each year's rollover counts against the kid's Roth limit ($7,500 for 2026, and never more than the kid's earned income that year).

The Trump Account is the closest thing to this article's setup on paper. A dollar a day is $365 a year, well under the $5,000 annual cap, and it can only hold low-cost US stock index funds charging 0.1% or less. Kids born in 2025 through 2028 who are US citizens with a Social Security number can also get a $1,000 Treasury deposit, if a parent makes the election on IRS Form 4547. We ran it against the 529 in Trump Account or 529.

Who controls the money at 18 or 21?

This is the question that decides whether the 47 untouched years happen at all.

In a UTMA account, California's law says the gift "is irrevocable, and the custodial property is indefeasibly vested in the minor." The custodian runs it until the handover age, and California's default handover is 18 unless the gift was set up with a later age. Other states set their own ages.

In a Trump Account, the kid owns it from day 1. The IRS says the growth period ends Dec 31 of the year before the kid turns 18. From Jan 1 of that year the kid can withdraw, paying income tax on the taxable part plus 10% unless an exception such as higher education or a first home applies.

In a 529, nothing hands over. The owner decides, which is also why it is the only kid-named account on the list where the money can move to a younger sibling.

In your own brokerage account, you keep control forever, and the kid has no legal claim to it at all. That is the trade: full control, and no separate pot with the kid's name on it.

Can I open a custodial Roth IRA for my baby?

Only if the baby has earned money. IRS Publication 590-A says you can contribute to a Roth IRA "if you have taxable compensation," and there is no minimum age.

The yearly cap is the smaller of the kid's taxable compensation or the IRA limit, which is $7,500 for 2026. A baby with no paycheck has a cap of $0, so a dollar a day from birth does not fit here unless the kid is earning.

Once there is real earned income, it is a strong container for a long hold, because qualified withdrawals come out tax-free under the Roth rules in IRS Publication 590-B.

What are the custodial Roth IRA earned income rules?

The cap is 1 line in IRS Publication 590-A. A kid can put in the smaller of $7,500 for 2026 or the kid's taxable compensation for the year.

Compensation means pay for work. The IRS counts wages, salaries, tips, commissions and net self-employment income. Interest and dividends do not count, so the growth in a baby's UTMA account does not open a Roth.

A paid modeling job or work in a parent's business can count, as long as the pay is for work the kid did and it is reported. Wages show up in box 1 of a W-2. A kid with net self-employment earnings of at least $400 has to file a tax return, per IRS Publication 501.

Family business pay has its own tax rule. The IRS says pay to a child under 18 from a parent's sole proprietorship, or a partnership where each partner is a parent, is not subject to Social Security and Medicare taxes. Income tax withholding still applies.

Go over the cap and the IRS charges a 6% excise tax on the excess for each year it stays in the account, unless the excess and its earnings come out by the tax return due date.

If your kid does have real pay and you are choosing between the 2 accounts, we ran them side by side in custodial Roth IRA vs 529.

What breaks the math?

Neither thing is arithmetic. Both are behavior.

1. Cashing out. The whole result above depends on 47 untouched years after 18. Account type decides whether that is even possible, because some hand full control to the kid at the age of majority and some do not.
2. Funding it out of your own retirement. If the dollar a day comes out of your 401(k) match, free employer money got converted into a slow-growing kid account. Your kid can borrow for school. Nobody is lending you money for retirement.

There is a third thing and it is not behavior. Every number above assumes somebody is still there to make the deposit in year 14. We ran what covering that costs in how much life insurance do I need with kids.

One of us opened the app during the April dip, saw red, closed it in 11 seconds, then reopened it 90 seconds later like that fixes it. It does not fix it. Mentioning it because every number above assumes somebody sat still for 47 years.

Frequently asked questions

How much is a dollar a day from birth worth at 18?

At 7% a year compounded monthly, a dollar a day from birth to 18 is $6,570 in and $13,101 at 18. Left alone to 65 at the same rate, it grows to about $348,300.

How much should I save for my kid each month?

There is no single right amount. At 7% for 18 years, $50 a month reaches $21,536, $100 reaches $43,072 and $150 reaches $64,608, before fees and taxes.

What is the best investment account for kids?

Each account trades taxes against control. A 529 keeps control with the owner and favors education, a UTMA becomes the kid's at the state handover age, and a Trump Account follows IRA rules after the year the kid turns 17.

Can I open a custodial Roth IRA for my baby?

Only if the baby has taxable compensation. IRS Publication 590-A caps Roth contributions at the smaller of compensation or the annual limit, which is $7,500 for 2026. Interest and dividends do not count as compensation.

How much should I save per month for my kid's college?

The math runs backward from a target. At 7% compounded monthly, $50,000 at 18 takes $116.08 a month from birth, $197.37 from age 5 and $390.02 from age 10, before fees and taxes.

At what age does a custodial account go to the child?

State law sets it. California's Uniform Transfers to Minors Act hands the property over at 18 unless the gift specified a later age.

Is a kids investment account taxed?

It depends on the account. A UTMA's income is the child's, and IRS Topic 553 says unearned income over $2,700 for a child under 18, and in some cases up to age 23, can be taxed at the parent's rate. The threshold is $2,700 for both 2025 and 2026. 529 growth is federally tax-free when spent on qualified education.

What return should I assume for a kid's investment account?

We use 7% nominal as a modeling assumption. The S&P 500 with dividends averaged about 10.0% a year from 1928 through 2025 (Damodaran, NYU Stern), before fees and inflation, and no rate is promised.

Checked Sep 16, 2026: 7% nominal is our modeling assumption, not a promise. S&P 500 geometric average about 10.0% for 1928 through 2025 (Damodaran, January 2026), 2026 IRA limit $7,500, 529 to Roth IRA lifetime cap $35,000, Trump Account cap $5,000 a year with the growth period ending Dec 31 of the year before the kid turns 18, kiddie tax line $2,700 (2025 and 2026). Rates and limits move, so check the date on this line before you lean on it.