Step #1: The When Factor.

The first thing you'll determine is when your child will be going to school. The longer time you have until they go to school, the longer you have to save, but you also have to realize that education expenses are climbing along with the rest of the economy. It will cost your child quite a bit more to go to college in fifteen years than it will in two.

Step #2: The Where Factor.

If your child has a good idea of what he wants to be, he may also have a good idea of where he wants to go. If your child has no idea, you would be better off determining whether you'll send him to a private or public institution. The price difference between private and public is drastic. Public institutions generally range in the several thousand dollar category for a semester whereas private institutions can range from $20,000 - $70,000 per semester. The where factor can be a hefty factor to your college saving plan.

Step #3: Calculating it.

Once you've determined how long you have to save and how much, you can determine how much per month you should be contributing. Calculate it out and if you are planning on putting your contributions in an investment fund like a 529 plan, factor in the interest gained over the years of saving as well.

Step #4: Choose your Saving Plan.

There are all sorts of ways to save for college. When you are determining how much your child will need, you will want to explore all your options and what kind of returns you can get. The better the returns you can get on a college saving plan, the less you have to contribute to the fund. Savings plans range from a savings account with very low returns to high yield stock investing that has a lot of risk involved, but could require very little contributions on your part to gain the money your child needs for college. Another popular option is a 529 plan or education IRA.

A 529 plan is a state or educational institution sponsored savings plan that allows parents to put away tax-deductible money towards a college education for a child and allows that child to withdraw the contributed funds and any gains tax-free for qualified education expenses. These plans don't have the highest yields, but they also are lower risk. An educational IRA works the same way.

Step #5: Contribute Regularly.

Your child's education fund will only be enough if you calculate correctly to begin with and contribute to it regularly. The more you contribute early on, the better your returns will be as with any investment, but it is never too late to start saving for your child's college education. Start now and be consistent about contributing to it. If relatives or friends send your child money for birthdays put at least part of it in your child's college savings plan. Ask others, like grandparents, to contribute. When your child starts earning allowance or gets a job, make sure that they also contribute to their college saving plan.