With the average cost at an in-state four-year college hovering around $22,000 a year, financial experts recommend college savings start early.
"The most important thing people need to understand is you need to start saving when your children are young," said Brian Gremminger, an Edward Jones Financial adviser in Magnolia. "When we see a birth announcement, we advise parents to open a college savings account of some type."
For young children, a common type of savings plan is a 529, Gremminger said. It is the most flexible savings plan and contributions to this plan are tax free and have a large lifetime contribution limit of more than $200,000, depending on which state you reside in.
In addition, the 529 plan does not have capital gains tax when the money is withdrawn for college.
Other options include a custodial account, which can be a trust fund, a bank account or a brokerage account, and is setup by an adult for a beneficiary— typically a parent for a child.
The Coverdell Education Savings Account is a tax-advantaged investment account that can fund expenses at elementary and secondary schools in addition to colleges. Another possibility is a bond that matures at the start of college.
"Parents should start putting away any amount they can save comfortably [for college savings]," said Ann Johnson, vice president of student success at Lone Star College Tomball. "If they can afford a hundred dollars a month, that's a good start."