Many parents dread sending their children to college. Books, tuition, lab fees, and dorm rooms can add up to tens of thousands of dollars. Either the parents have to come up with thousands of dollars, or the child has to take out student loans that they might not pay off for decades.

Instead of scrambling for funds at the last minute, talk to a financial advisor about creating a college savings account. College savings plans come in a few varieties. The most popular is the 529 Savings Plan. But there is also, a Coverdell savings account, a custodial account (UGMA/UTMA), and individual trust account. Let’s focus on the most common, the 529 college savings plan. This account allows you to contribute tax-deferred money for tuition and fees. You can wait until college to withdraw the money or take out money for the child's elementary and high school expenses.

College savings plans are like retirement funds: it's never too early to start saving. Many parents and grandparents open a 529 account shortly after the child is born. If they have money saved up, they can start with an initial deposit, then add money whenever they can, even on a monthly basis. Since 529 plans are State sponsored, the maximum amount that can be contributed for each beneficiary is State specific. 529 savings plans are the only savings vehicle that allow an individual to contribute more than the current annual gift amount (up to $16,000) without incurring tax consequences. These types of plans allow the contributor to front load five years’ worth of gifts ($80,000 as of 2022) into one year.

While it's best to start early, it's never too late to make a 529 college savings plan. Even if the child is a teenager, you'll contribute money to their education that they wouldn't have otherwise. You can use the money for other educational expenses if the child earns a scholarship or transfer the account to a sibling for their educational needs.