Determine how much you can contribute to your child's college fund and not overly stress your finances. The key is to be consistent even if you're only putting aside a small amount every month.
Invest in an educational savings account, or ESA. An ESA has an annual contribution limit of $2,000. Your money grows tax-deferred in this type of account, meaning that distributions are tax-free if used for qualified educational expenses. Your income cannot exceed $110,000 annually as an individual or $220,000 as a couple to qualify for this plan.
Consider setting up a 529 plan. Your money grows tax-deferred in this type of account as well, but you may contribute up to $320,000 total, and there are no income restrictions. This would be a better plan for those who are able to contribute more than $2,000 per year. You may contribute up to $13,000 a year if you're single, or $26,000 as a married couple, without paying gift taxes.