College is expensive. But with the right plan in place, it doesn’t have to be financially financially stressful.

Here’s how to start saving and investing for your child’s education—strategically.

Step 1: Open a 529 plan before your kid’s 1st birthday

Yes, really. You can open a 529 plan as soon as your child has a Social Security number. The sooner you start, the more time you give compound growth to do its job.

Don’t have kids yet but planning for them? You can name yourself as the beneficiary, then change it to your child once they’re born. You’ll still benefit from the tax-free growth in the meantime.

Step 2: Use a 529 plan as your default

For 95% of families, a 529 plan is the best choice. Why?

• Tax-free growth

• Tax-free withdrawals for qualified education expenses

• Possible state tax deductions

• High contribution limits (up to $500K+, depending on the state)

If you want the money to be available for things other than education—or want your child to control the money at age 18+—consider a UGMA/UTMA custodial account. Just know it could reduce their eligibility for financial aid.

Step 4: Pick the right investment option

If your 529 plan offers age-based portfolios (AKA target-date funds), that’s a great hands-off option—they get more conservative as your child gets older.

But if you want to maximize long-term growth, consider a custom portfolio using:

• 70% in a U.S. Total Stock Market Index ETF (i.e. Vanguard Total Stock Market Index ETF)

• 30% in an International Index ETF (i.e. Vanguard Total International Stock ETF)

Keep it simple. Revisit the allocation every 3–5 years as your child approaches college age.

Step 5: Know exactly what counts as a qualified expense

You can use 529 funds tax-free for:

• College tuition, fees, books, supplies, computers

• K–12 tuition (up to $10K/year)

• Apprenticeship programs

• Student loan repayment (up to $10K)

• Room & board (if enrolled half-time or more)

Don’t use it for transportation, sports fees, or health insurance. Those don’t count—and you’ll pay income tax + a 10% penalty on earnings if you misuse the funds.

Bottom line

Start early. Use the right account. Stay consistent. And know the rules.

It’s not about hitting perfection—it’s about building a plan that actually works.