New Parents | Capital Group

Here's what other parents are asking

Baby steps: How to plan, save and budget for your first child

Having a baby is fun, crazy and a little bit scary. Smart planning can help you cope more easily with the day-to-day costs, as well as setting your family up for a bright future.

  • Managing short-term budgets and long-term financial plans can really pay off in the years to come.
  • Opening a tax-advantaged account like a 529 education savings plan is easy.
  • Using apps and online tools can help you track your budget and manage your accounts.

A 529 savings plan is more flexible than you think

One of the best things about parenthood is the joy you feel when your baby does something unexpected and amazing. Many of us envision our children going off to a university someday, but there’s no guessing what exciting talents and plans your child will pursue. If the future doesn’t include college, is a 529 savings plan still a good idea? Absolutely!

  • Expect the unexpected, and start planning now.
  • Don't worry: If you don’t use it, you won’t lose it.
  • Know your options for a 529 savings plan.

Planning for college? Save now to avoid borrowing later.

Have you just begun to think about how you'll pay for college? Then think about this: Not all of those ways are created equal. By starting early and saving a little at a time, you may be able to avoid costly student loans later on. Avoiding procrastination could save you thousands of dollars.

  • The earlier you start saving, the more your investment can potentially earn.
  • Remember that interest rates on a loan will cost you much more down the line.
  • Setting up automated savings can make it easier to set aside a monthly amount.

Savings calculator

How much should you save? It depends on your income and the schools you have in mind. It’s fine to start small.

If I save       a month

Starting

Birth 18 years old

Estimated savings when my child is 18 years old:

$0*

That's about 0% of what you'll need for four years of in-state tuition.

* Assumes a hypothetical 6% growth rate.


Ready to create a detailed plan?

Go to the college calculator
Savings if you started today
$ 0
Savings if you started after 0 years
Go to the college calculator

Give it a boost!

save taxes iconYearly bonus? Tax refund? Put part — or all — of it into your 529 education savings plan.

on track iconAsk for gifts toward your child’s 529 savings plan on birthdays and holidays.

on track iconHave your child join in the effort.
Lemonade stands and part-time jobs can help grow the funds, too.

It’s better to start somewhere and start now. Small savings can make a big difference over time.

CollegeAmerica 529 savings plan basics

Saving for education is like planning a big trip — getting to your destination takes a good plan. A 529 savings plan is a popular way to save for college.

A CollegeAmerica 529 savings plan makes it easy.

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Flexible

You can use funds from a 529 savings plan for more than college tuition, including housing, books and computer equipment.

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Save on taxes

The earnings on your 529 savings plan investments are exempt from federal taxes, and in many cases, free of state taxes. Tax-advantaged treatment applies to savings used for qualified education expenses. State tax treatment varies.

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Transferable

A 529 savings plan gives you the option of transferring the account to another child, a relative, even yourself!

Have more questions?

Wondering how to save for your child’s education? Get answers about opening an account, making contributions and withdrawals, updating your beneficiaries and more.

Do I need to use my own state's plan?

No. Many states offer national plans, so you can invest in them, no matter where you live — or where your child eventually goes to school. Depending on your state of residence, there may be an in-state plan that provides state tax and other state benefits, such as financial aid, scholarship funds and protection from creditors, not available through CollegeAmerica. Before investing in any state's 529 plan, investors should consult a tax advisor.

How much do I need to open an account?

We’ve made it as easy as possible. You can open an account with as little as $250, and make additional contributions as low as $50. And, for an employer-sponsored program, it's even easier . . . you can automatically invest as little as $25 per fund on a schedule you select. Some employers offer 529 savings plans that enable you to contribute directly from your paycheck.

How do I contribute to my account?

If you opened the account, you can set up an automatic investment plan, or contribute additional money online or by check anytime.

choose

CollegeAmerica 529 savings plan

You trust your doctor with your health and your mechanic with your car. You shouldn’t settle for anything less when you’re deciding where to invest your money.

Trusted by more than 1 million families nationwide, CollegeAmerica is the country’s largest 529 savings plan,1 with more than $66 billion invested.2

why us background image

We're helping more than 2.4 million future students pursue their dreams.3

  • Any adult who's a U.S. citizen or legal resident can open a CollegeAmerica 529 savings plan, regardless of income.
  • The earnings in a 529 savings plan are exempt from federal taxes if withdrawals are used for qualified expenses. And some states offer tax benefits as well.
  • CollegeAmerica has among the lowest fees in the industry.4
  • If withdrawals are used for purposes other than qualified education expenses, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax. States take different approaches to the income tax treatment of withdrawals. For example, withdrawals for K-12 expenses may not be exempt from state tax in certain states. State tax treatment varies.
  1. Largest by assets, according to the 1Q 2020 "529 College Savings Quarterly Update" from ISS Market Intelligence.
  2. As of March 31, 2020, CollegeAmerica AUM is $66.4.
  3. Number of accounts as of March 31, 2020, Strategic Insight.
  4. "529 College Savings Quarterly Fee Analysis," ISS Market Intelligence, 4Q 2019. CollegeAmerica’s fees were in the top quartile of 30 and 18 plans based on the average annual asset-based fees for national advisor-sold and fee-based advisor-sold 529 plans, respectively.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, summary prospectuses and CollegeAmerica Program Description, which can be obtained from a financial professional and should be read carefully before investing. CollegeAmerica is distributed by American Funds Distributors, Inc. and sold through unaffiliated intermediaries. 

Depending on your state of residence, there may be an in-state plan that provides state tax and other state benefits, such as financial aid, scholarship funds and protection from creditors, not available through CollegeAmerica. Before investing in any state's 529 plan, investors should consult a tax advisor. 

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation. 

American Funds Distributors, Inc., member FINRA.

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.