BCBetter Calculators

Child Savings Calculator

Estimate how much you'll save for your child by a target age.

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Enter your values and click Calculate

How It Works

The formula used is the future value of an ordinary annuity with monthly compounding: FV = PMT × ((1 + r)^n − 1) / r, where PMT is the monthly contribution, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of months (years × 12). The numerator (1 + r)^n − 1 represents the compounding growth factor minus 1, and dividing by r converts that growth into a monetary total. As a worked example: $100/month at 6% annual rate for 10 years gives r = 0.06 / 12 = 0.005 and n = 120. The growth factor is (1.005)^120 ≈ 1.8194. FV = 100 × (1.8194 − 1) / 0.005 = 100 × 163.88 = $16,388. Of that total, $12,000 came from contributions (100 × 120) and $4,388 came from interest — meaning compound growth added roughly 37% on top of what was deposited. If the rate is zero, the formula reduces to PMT × n, which is simple multiplication with no growth component.

Examples

College Fund
$200/month at 5% annual return for 18 years — a common target for parents starting at a child's birth.
Result: Approximately $68,676 saved, of which $43,200 was contributed and $25,476 came from interest.
Head Start Fund
$100/month at 6% annual return for 10 years — a grandparent's gift started at birth.
Result: Approximately $16,388 saved, with $12,000 contributed and $4,388 in compound interest.
Aggressive College Savings
$300/month at 6% for 15 years — higher contributions with a moderate return assumption.
Result: Approximately $87,357 saved, with $54,000 contributed and $33,357 from compound growth.

Frequently Asked Questions

What account should I use for child savings?
A 529 college savings plan offers significant tax advantages for education expenses in the US — contributions grow tax-free and withdrawals for qualified education costs are also tax-free. For more flexible goals, a custodial UGMA/UTMA account invests in the child's name and can be used for any purpose, though it lacks the tax benefits of a 529. Coverdell Education Savings Accounts are another option with lower annual contribution limits but slightly broader expense coverage.
What interest rate should I assume?
Broad US stock market index funds have historically returned roughly 7–10% annually before inflation, but past performance does not guarantee future results. A conservative planning assumption of 5–6% accounts for market variability and is commonly used by financial planners for long-term projections. If the fund is invested more conservatively in bonds or a savings account, a lower rate of 2–4% is more realistic.
Does this account for inflation?
No — the calculator shows nominal future value, not inflation-adjusted purchasing power. To account for inflation, use a 'real' rate of return by subtracting the expected inflation rate from your nominal rate. For example, if you expect 7% nominal returns and 3% inflation, enter 4% as your rate. This produces a result expressed in today's dollars, making it easier to compare against current college costs.

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