Once saving becomes part of your budget, money will begin to accumulate. It’s important to take advantage of the financial strategies that will help your college savings grow in value. Perhaps the most important thing you can learn about saving is the importance of compounding—given time, compounding makes small investments large. Consider the following hypothetical example:

The week the McMillans had their first child, David, they opened a college savings account. It wasn’t always easy, but they managed to put $200 away each month until David was 18 and ready to go to college.

The Rileys’ child, Barbara, was born the same month as David McMillan. Since money was tight for them, they decided to delay opening a college savings account until they were earning more. When Barbara turned 9, they opened the account and were able to contribute $600 a month until she was ready to go to college at age 18.

Both the McMillans and the Rileys invested their college savings in the same mutual fund. It earned 8 percent compounded annually. The McMillans’ total contribution was $43,200 and the Riley’s total contribution was $64,800. Which family do you think had the larger college fund?

You’ve probably guessed the answer. The McMillans had the larger college fund at $96,657—they accumulated more than $53,450 in compound interest on their investment of $43,200. The Rileys had nearly as much—their fund was worth $95,087 — but they had to invest $64,800 to do it. As you can see, time is a critical component to make investments grow. It’s not just how much money you save that counts, it’s also how much time you have for that money to work for you. You need to start saving as early as possible.

Note that these are theoretical examples presented to illustrate the power of compounding; they do not take into account taxes, account fees, or inflation. Specific interest rates or conditions used in the examples may not be attainable or desirable.