Sebastian Marquez’s daughter is 7 months old. She can’t walk or talk yet, but by the time she’s 18, her net worth could be six figures.
Marquez, who is based in Strathroy, Ont., said finding out his wife was expecting was “one of the best things in my life.” Shortly after, the 28-year-old, who has been diligently tracking his spending since 2020, pulled out a spreadsheet.
He added categories to the budget for future childcare costs and living expenses such as baby clothes, diapers, formula and toys.
Another budget line, he says, is $150 a month into a Canadian government-backed registered education savings plan he set up for his daughter. All numbers are converted from Canadian dollars to US dollars unless otherwise noted.
Similar to 529 plans in the United States, RESPs are educational savings accounts for Canadian parents that allow you to grow your investments tax-free. Funds from the account must be used for qualified expenses related to post-secondary education, and instead of providing tax-free withdrawals like 529 plans, RESP holders may be eligible for government subsidies that match contributions up to a certain percentage.
Sebastian and Julia Marquez play with their 7-month-old daughter and dog.
Aizic Griman | CNBC Make It
Marquez receives the Canada Education Savings Grant, which pays 20% for every $1,795.60 (CAD$2,500) he contributes each year, with a lifetime maximum contribution of approximately $5,200 (CAD$7,200).
Marquez said he makes all his own investments, choosing index funds traded on the Toronto Stock Exchange, including those that track the S&P 500, Nasdaq and other U.S. stocks. Given the historical performance of these funds, he estimates that the average return on investment over the next 18 years will be 12% per year.
CNBC Make It calculates that, assuming a 12% annual interest rate, Marquez’s $150 monthly contribution, and a government savings subsidy, his daughter will have about $134,000 in her RESP account by her 18th birthday. Using a more conservative 7% return rate, the total savings would be approximately $68,000.
In Canada, where the average undergraduate tuition fee for a citizen is just over $4,800 for the 2025-2026 academic year, according to government data, the funds her daughter will put in the RESP will be “more than enough to support her in the future,” Marquez said.
Any money left in the account after paying for her education can be transferred to or withdrawn from another beneficiary, such as her daughter’s future children, but investment growth may be subject to income tax.
How to save money on your child’s education in the US
There are many ways for American parents to save for their children’s college education, but many experts recommend opening a state-backed, tax-advantaged savings plan called a 529 account.
Generally, these plans allow you to invest funds that have already been taxed as income, grow them tax-deferred, and withdraw them tax-free when used for qualified education expenses. All 50 states except Wyoming offer at least one type of 529 education plan.
Parents should “start a 529 plan as soon as the baby is born, or even before,” Ty Kim, wealth strategist at Trust Wealth, told CNBC Make It in August.
Starting in January, 529 account holders will be eligible to use tax-free funds for an expanded list of education and training expenses, including certain costs related to vocational programs, required continuing education, law, accounting, and finance licensing programs.
Funds left in a 529 account can be rolled into a Roth Individual Retirement Account, sent to family members, used to pay off student loans, or withdrawn in full. However, any proceeds not used for qualified expenses may be subject to income taxes and penalties.
Kate Byrne, director of Vanguard Cash Plus Distribution, told CNBC in August: “If you have the means, have emergency savings, and have a retirement fund in place, checking out a 529 account can be of great benefit to parents, and the benefits to their children will pay off for decades.”
All amounts are in U.S. dollars and converted to Canadian Dollars at the OANDA exchange rate of September 30, 2025: 1 Canadian Dollar to 0.71824 USD.
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