Bringing up Baby on a Budget

College is not the only big expense new families need to think about and plan for. "As important as college is, there are a few things parents need to do first for the family before they save for college. Save $1,000 fast for small emergencies. Pay off all your debts except for the house, smallest to largest. Save three to six months of expenses for life's big emergencies. Maximize your retirement investing," says Ramsey.

While it's important to plan for college, you shouldn't neglect other things to pay for it. "Keep in mind though that the kids can get loans for college, but you can't borrow for retirement," says Monroe.

While saving for college and for the future are important moves, Michael Sullivan, director of education at Take Charge America, believes that there are important things to spend money on while your child is young. "It is not wise to skimp on preschool education or life enrichment activities such as travel just to save for college. The younger years will have more impact than the years from 18 to 22."