Only 16% of Parents Are Absolutely Certain They'll Reach Their Higher Education Savings Goals. Here's How to Increase Your Chances of Success

Maybe your goal is to save enough money to put your kids through four years of private college. Or maybe you'll be happy if you're able to cover tuition and room and board for an in-state public school. 

No matter your personal college savings goals, it's important to feel confident about your ability to meet them. But data from Vanguard reveals that most parents aren't feeling optimistic. In fact, only 16% think they're in a great position to meet their education savings goals.

One thing you should know is that the sooner you begin saving for college, the more likely you are to be successful in accumulating enough money to fund your kids' education in full. But starting early is only half the equation.

It's all about putting your money to work

Some people begin saving for college the moment their children are born. And while that might seem extreme, remember that you might have a 40- to 50-year career to save and invest in an IRA for retirement. On the other hand, you might only have an 18-year window to build up a college fund, so it's important to get started as early as possible.

But you don't just want to save money for college. You also want to invest that money. Doing so could mean ending up with a lot more funds by the time your kids' tuition bills start coming due.

Over the past 50 years, the stock market has rewarded investors by delivering an average annual 10% return (before inflation), as measured by the S&P 500. So, let's say you're able to save $300 a month for college for your kids over an 18-year period. If you keep that money as cash in a savings account, you might get 2% to 4% as a return over time. On the higher end, you'd be looking at a college fund worth $92,000. That's not a small amount of money, but it may not be enough to cover costs for multiple children in full.

On the other hand, let's say you invest your $300 a month during that 18-year period and snag a 10% average annual return. That leaves you with $164,000 in college savings, which could do a lot more for your kids.

Where to invest your money for college

You have options when it comes to finding a home for your college investments, but two choices worth looking at are 529 plans and Roth IRAs. Both accounts allow you to enjoy tax-free investment gains as well as tax-free withdrawals when money is taken out to pay for college. 

However, both plans come with restrictions. With a 529 plan, you'll be penalized for removing funds for non-education purposes. And Roth IRAs come with annual contribution limits you'll need to adhere to. As such, you may decide to forgo the tax break these accounts offer and invest for college in a regular brokerage account. You'll lose out on some benefits by going this route, but you'll also enjoy more flexibility with your money from start to finish.