Families frequently ask financial advisors how much should they be saving for children’s college educations, but they’re generally not looking for heavy details on how such figures are derived.

Mark Baniewicz, president and CEO of Socius Family Office in Boca Raton, Fla., crunches the college-savings numbers from multiple angles but keeps the math explanations to a minimum when communicating with clients. “A lot of the time, at least with my clients, it’s like a word problem and they just want the answer,” he says. “I try to give the clients simple rules of thumb.”

He has never shown clients his Excel spreadsheets that factor in the ages of children, family savings habits, and projected inflation and interest rates. “That would be TMI [too much information], I think, for a client,” he says. “It would probably cause them frustration and confusion.” Instead, he encourages clients to discuss their goals and comes back to them with plans he thinks will help them meet these goals.

But Baniewicz shared his spreadsheets -- which focus on the time value of money -- with FA. In the chart Calculating College Costs, you can see how much he estimates a parent would need to save to cover \$1,000 of annual costs for four years of college. For example, a parent expecting costs of \$60,000 a year in today's dollars for their newborn would need to save \$7,122 for each \$1,000, or a total of \$427,320, to cover four years of costs.

“It’s the easiest way to think about it,” he says, because the figures can be multiplied by 10, 60 or however many thousands of dollars a school costs today.

Baniewicz factors in 3 percent annual college inflation, which is based on historical data (tuition inflation has increased at roughly twice the rate of the Consumer Price Index since the 1950s, he says) and the bond market’s current forecast of inflation of 1.35 percent over a 20-year bond horizon.

But it’s the present value of money and “discounts” that stand out. For example, parents able to fully fund a child’s college education at birth must save \$2,749.76 instead of \$7,122.34 for each \$1,000 of current college costs. This 61 percent discount assumes a 5 percent rate of return and 3 percent annual college inflation. His charts also show college payments and discounts when smaller sums are invested monthly, quarterly or annually.

Investing in a tax-advantaged 529 college-savings plan account early allows the markets and compound interest to work best, say Baniewicz. New clients recently asked him about opening one for their high-school senior. Generally, it’s too risky to hold equities this close to the college years, he says, “and it wouldn’t make a ton of sense just to go open a 529 plan to hold short-term bonds paying 1.2 percent.”

However, since 529 accounts are transferable, it could make sense if an 18-year-old has a significantly younger sibling, he says. “You can try to accumulate the pool but if the markets do poorly early on for the kid going to school now, then that’s the money for the kid who is six,” he says. “You allow it to grow and you don’t try to liquidate the 529 plan while the markets are down.”