By e how Personal Finance Editor
Using money you can put aside and your child's own contributions from allowance and birthday funds, you can create a tidy nest egg for your child's education.
Instructions
Difficulty: Moderate
Things You’ll Need:
- Financial Calculator
- Brokerage Accounts
- Savings Accounts
- Paper And Pencils
- Personal Financial Software
Step1
Start early and let compounding work for you - that is, earning interest on interest. The more you can save now, the less you will have to set aside later. Step2
Buy a mix of investments such as mutual funds, savings bonds, individual stocks and corporate bonds. Step3
Look into setting up an education IRA (Individual Retirement Account). Contributions are not tax-deductible, but your investments grow tax-free until you withdraw them. Step4
Find out whether the state in which your child will likely attend college offers a state-backed tuition-savings plan. Step5
Check out mutual funds that specialize in college-tuition savings. They won't ask for big monthly investments. Step6
Ask relatives who regularly send birthday, Christmas or Hanukkah gifts to consider putting a part of the money into savings bonds or other investments for your child. Step7
Encourage your child to contribute 10 percent of a weekly allowance or income from part-time work to the investment pool. Step8
Give your child a role in making decisions about the investments to learn about and appreciate sound personal-finance habits. Step9
Start searching for college grants, scholarships and work-study deals before your child completes his or her junior year of high school. 
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