As a parent, you want what’s best for your children. At a minimum, consider putting a roof over their heads, getting food in their bellies, and showering them unconditionally. However, once those basic needs are met, you may think about other ways to give your children an advantage. Many parents have a goal of paying for college. Starting a college fund to help pay for your children’s future educational costs can reduce their reliance on student loans and set them up for financial success post-graduation. It can also teach them valuable money habits that’ll serve them well regardless of where they go to school or what they end up majoring in. Want to start saving but don’t know where to start? We’ve got ideas about how to save for college and start a college fund.

1. Assess your family situation. 
   Before starting your child’s college savings fund, it’s essential to check in with your family’s financial situation. This will allow you to make more realistic decisions about how much money you can and should contribute to your child’s future educational expenses. In assessing your situation, you should ask yourself questions like these:
   • How many children will you be saving for? The answer to this question will affect many aspects of your plan—from the number of accounts you open to the size of your contributions. Even if you have only one child now, consider the plans you have down the road for the size of your family.
   • How much time do you have to save? The longer you have to save before your child needs to access their college fund, the more it will be able to compound and grow—and the less you will need to contribute each month or year to reach your savings goal. Whether your family is complete, you’re expecting, or you’re still planning for a first child, knowing your timeline is essential to creating a plan.
   • How much should you save for college? College is expensive. The average college tuition, including fees, for the 2024-25 school year ranged from a low of $10,940 per year (for in-state students completing a four-year degree at a public college) to a high of $39,400 per year (for those completing a four-year degree at a private, nonprofit college). And that doesn’t even include room and board, which can easily add $10,000 or more yearly. Worse, these costs are only expected to continue rising yearly. Estimating how much your child will need to pay for college will give you a better sense of how much you should save. 
   • How much room do you have in your budget? It’s one thing to know how much you should be saving. However, how much you can contribute to your child’s college fund will depend on your family’s budget. This budget shouldn’t just include your monthly living expenses and other important financial goals you are working toward, such as paying down debt and saving for retirement. Though you may want to prioritize saving for college because it will happen sooner, you’ll want to ensure you’re on track to meet your other future savings goals.
2. Choose your account type and open the account
   These include accounts specifically designed to save for educational costs, such as a Coverdell Education Savings Account (ESA)
   Which account type makes the most sense for you will depend on several factors, including how much you plan to contribute, how much flexibility you want or need, and what tax benefits you are hoping to realize. A financial advisor can help you weigh your options and guide you through opening the account to ensure you’re putting your money to work efficiently.
3. Contribute to the account regularly
   The next step is to fund the account. While it may be possible to make a lump-sum contribution to the account once or twice a year, most financial advisors will likely recommend that you fund the account regularly and consistently over the long haul. Monthly contributions aren’t just easier to work into your budget; they also help you build healthy saving habits and allow you to teach your kids about the value of making small, steady progress toward a financial goal.
4. Periodically adjust your plan as necessary
   Did you get a promotion or a new job with a significant pay increase? Maybe you can afford to boost how much you’re saving. Have you added another child to the mix? Perhaps you’ll need to take another look at the math to ensure that you’re keeping the right amount for all of your children. Unexpected time off from work? Maybe you’ll need to hit the pause button on saving and take a break until you’re back into earning mode. As your financial situation changes, it’s essential to regularly revisit your plan so that you can adjust it accordingly. Likewise, periodically checking your progress is a good idea even if your financial situation hasn’t changed. After all, there are no guarantees in investing; just because you might have expected or anticipated a certain return on your savings doesn’t mean that’s what you’ll get. If your investments haven’t met your expectations, you may need to boost your contributions (if possible) to stay on track with your goals.
5. Involve your child
   Discuss a college fund with your child, including how much you believe you’ll be able to contribute to their expenses and how you’re saving. If you’re able to cover the whole bill—that’s great! If not, discuss other options for making up the gap with your child. Help them understand options like scholarships, grants, and student loans and the strings attached to those. Also, discuss the differences in cost between public and private universities or going in-state versus out-of-state and how that impacts what they’ll be able to afford. Having this information upfront, before they have their mind set on a specific program or school, allows them to make a more informed decision about where they apply.

Reference
https://www.northwesternmutual.com/life-and-money/how-to-start-a-college-fund-for-your-kids/.