Savings & Retirement
Published July 9, 2026
Set the target in future money, then solve for the monthly amount. PMT = FV / (((1 + r)^n - 1) / r), where r is the monthly return and n the months until the money is needed. Reaching 2,000,000 in 15 years at an 8% return needs about 5,780 a month.
Few financial goals feel as important, or as intimidating, as funding your child's education. Headlines about soaring tuition can make the target seem impossible. But with an early start, a realistic estimate, and the quiet power of compounding, the monthly number is often far smaller than parents fear. This guide shows you how to set a goal, adjust for education inflation, and figure out how much to save each month.
Start with today's cost of your target education, a public university, private college, or vocational program, then project it forward. Here's the catch most people miss: education costs rise faster than general inflation, historically around 5% per year. A program that costs $20,000 a year today could cost far more by the time a newborn enrolls.
To project a future cost, compound today's price by the education-inflation rate over the years until enrollment:
Future Cost = Today's Cost × (1 + inflation)^years
At 5% inflation, $20,000/year today becomes roughly $48,000/year in 18 years. Multiply by the number of years of study to get your total goal.
Here's the encouraging part. Because your savings can grow for many years, you don't need to save the full future cost yourself, investment growth covers a large slice. The earlier you start, the bigger that slice.
| Start Saving When Child Is… | Years to Grow | Relative Monthly Amount Needed |
|---|---|---|
| Newborn (0) | 18 | Lowest |
| Age 6 | 12 | ~50% more |
| Age 12 | 6 | ~2, 3× more |
Waiting isn't neutral, it shifts the burden from investment growth onto your monthly cash flow. This is the same lesson from compound interest: time is worth more than money.
Enter your child's age, the education cost, and an expected return to see exactly how much to save each month to reach your goal.
Use the Education Planning Calculator →Once you know your future goal and years available, you can solve for a monthly contribution. As a rough illustration, reaching a $200,000 education fund in 18 years at a 7% average return takes roughly $430 per month. Reaching the same $200,000 in just 8 years requires closer to $1,550 per month, more than triple, because there's far less time for growth to help.
If the full number feels out of reach, remember that partial funding still matters enormously. Covering half the cost through savings dramatically reduces the debt your child (or you) might otherwise take on.
The most reliable way to hit a long-term goal is a fixed, automatic monthly investment, the same disciplined approach behind a Systematic Investment Plan (SIP). Automating removes willpower from the equation and smooths out market ups and downs over the years. Even modest amounts, invested every month without fail, compound into meaningful sums.
It's natural to want to prioritize your children, but most financial planners are firm on this point: fund your own retirement before your child's education. The reason is simple, your child can borrow for college through scholarships, grants, and loans, but no one lends you money for retirement. Secure your retirement contributions and any employer match first, then channel additional savings toward education. Check your retirement trajectory with our Retirement Calculator.
Divide the future cost by the annuity factor for your timeline and expected return. For a 2,000,000 target in 15 years at 8%, that works out at roughly 5,780 a month.
The future cost. Saving toward today's price guarantees a shortfall, because fees will have risen by the time the money is needed. Inflate first, then calculate the monthly amount.
The monthly figure climbs sharply. The same 2,000,000 target over 10 years instead of 15 needs about 10,930 a month rather than 5,780, nearly double, for a delay of five years.
Where a tax-advantaged education account exists, it usually beats a general account for money genuinely earmarked for study, because the tax saving compounds alongside the returns. Check the withdrawal rules, since non-qualifying withdrawals often carry a penalty.
This is the main argument for keeping some of the money outside a restricted account. Dedicated education accounts often penalise non-qualifying withdrawals, while a general investment account keeps every option open at the cost of the tax benefit.
Yes, and retirement generally comes first. There are loans and scholarships for education and none for retirement, so pausing retirement contributions to fund fees usually costs more over a lifetime than it saves.
The cost of education is real, but it's not insurmountable when you start early, estimate honestly, and let compounding carry much of the load. Set your number with the Education Planning Calculator, automate a monthly contribution, and adjust as you go, your future graduate will thank you. For official guidance on this topic, see the CFPB's savings guidance.
This article is for educational purposes only and is not financial advice. See our Disclaimer.