How do I save money for daughter's education?

My parents were in the same situation you are in (I'm one of four). When we were all young, my parents used to put aside about 5% of each of their salaries into special accounts in our names (that accrued interest over time). That money is the money that was used to help us pay for college. I just recently got married and while my husband and I don't have a lot of money, we do plan to have children some day so we've already starting saving this way. I hope this helps.

Set up a bank account in her name.  Start with just taking 4% of your net income into the account.   Once you reach $2000, take one thousand, and start investing it with the lump sum, and then put your contributions towards that investment.  Stick with funds, as you will be low risk but wishing to have higher gains than bonds.  Any birthday funds, etc, that she receives, place in the bank account as that's her money that she received at the time until it reaches $3000, then take a grand into the funds again (so you are left at @2k.  You will want to keep her liquid cash to about $2000 dollars as valued in 2008 (so you are tring to put in cash for inflation) so when she is 16 she can begin on her own with some responsibilities.  But the investment money is there for when she plans to go to school.

I'm not sure where you live as well, but in Canada, we have a registered education savings plan.  There is probably some tax shelter on earnings from educational investments in your country as well that you should definitely leverage.

 Best of luck.

529 Plans: A Tax-Free Way to Save for College

This might help you in the right direction.......Good luck and Congrats on your daughter........ 

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