How to Save for Your Child’s Future

We all want the best possible start for our kids.  In the society we live in, that often means setting them up well with a good stock of money that they can rely on later in life!  Until your children are able to earn money for themselves and to make use of their own savings, it makes perfect sense to start putting a little bit of money aside for them for a variety of reasons.

You might want to put money away to help them save for their education, for any adventures they might wish to go on when they are older, or you may simply want to help them understand the importance of saving and the value of money.  In any case, one of the best things you can do to offer your children the best start in life is to set them up with a top child savings account.

How to Start Saving for Your Child’s Future

Start Early

Deciding to save money for your children is all well and good, but how do you actually get started?  First of all, the best thing you can do is start early.  If you’re able to start putting money away from the moment they are born, more power to you!  After all, the more money you save the earlier you can, the more they’ll have to unlock at a later date when they’re old enough.

Decide On The Best Option For Saving

You’ll also need to start looking at the various types of child savings accounts available.  These work a little similar to adult savings options, but come with a whole host of protections and added benefits for your specific purposes of saving.  Therefore, you’ll want to take a close look at banking products which are available to you and your growing family.  The days of safely stashing money under the bed are over – take advantage of what high street saving has to offer you and your little ones.

Open A Suitable Child Savings Account

This is where things start to look a little bit more complicated, but don’t worry!  Let’s take a look at the main choices available below in close detail.

Junior ISA

A Junior ISA will give you the opportunity to pay regularly into your child’s savings account without tax ever coming into the picture.  It’s not just parents who can pay in, either.  What sets the child variant of this account aside from the adult alternative is the fact that funds will be locked away until they are 18 years of age!

Pros:

• A great way to help teach your kids how to save
• Parents and other family members can pay in
• It’s tax-free

Cons:

• Funds can’t be accessed until the holder is 18 years old
• There are limits on how much you can save each year

Junior Stocks and Shares ISA

A stocks and shares ISA for children will, instead of letting you transfer physical money, instead allow you to invest in various equity markets.  The aim of this type of account is to try and get a better return once your child turns 18.  However, you can also mix in various other bonds and assets along the way.

Pros:

• Flexible long-term option
• Plenty of potential to earn much more money than you put in
• You can diversify your investments

Cons:

• There’s no guarantee of the return you’ll receive
• Investments carry some risks – physical cash may be safer

Regular Savings Accounts

While the name may suggest that these accounts are simply run-of-the-mill, regular in this context means you’ll need to pay in regularly to keep the account’s features active.  What sets these accounts apart from the pack is the fact that they are generally offered with high rates of interest, which obviously means you could be saving more money in the long run.

Pros:

• Generous interest rates for regular savers
• A great option to help children learn how to save

Cons:

• It’s not always simple to take money out
• You’ll need to pay money in each month to retain your interest rate

Instant or Easy-Access Savings Accounts

As the name suggests, these accounts are easier to access than ISAs or regular savings models.  These accounts simply allow you to deposit and withdraw whenever you like.  It’s taken out in the name of your child, but can be handled by parents and guardians.  For more flexible saving, this may be a more viable option.

Pros:

• Instant access to money in and out
• You don’t have to make regular payments

Cons:

• You may get a lower rate of interest than with other savings account types
• There’s no protection for your money as it can be withdrawn any time

Fixed Term Savings Accounts

Fixed term accounts are ideal if you want to tie up your children’s money for a set period of time.  These are fantastic at making money, too, as they often arrive with solid, competitive rates of interest.  To be able to access such rates, you’ll need to refrain from withdrawing too much, if at all.

Pros:

• Great rates of interest – some of the best around
• A great way to seal your children’s money away

Cons:

• You may not be able to withdraw to get access to interest rates
• It’s not necessarily simple to withdraw during sealed-off periods

What Do You Need to Open a Child Savings Account?

Child savings accounts can be opened in a variety of ways.  It really will depend on the bank you save with, and the type of account you opt for.  Many different banks now allow you to apply for bank accounts for children online in just a few steps, while others will need you to attend a physical branch.

If this is the case (the latter), you may need to make an appointment with your bank along with your children and any birth certificates which may be requested. 

Some children’s savings accounts can even be administered by the children themselves, though most will require adult approval and consent to make withdrawals and to undertake general banking matters.  For example, some accounts may require an adult signature and approval for withdrawals over a certain amount.

You can freely discuss any and all access options with your choice of bank before you start saving.  This way, you can always keep up to date on what is expected from you in terms of the financial administration side of things.

Can Grandparents Open a Child Savings Account?

Yes!  Grandparents are absolutely free to open savings accounts for children providing they have valid documentation available with them to do so.  Grandparents who choose to pay in for their grandchildren can also benefit from tax-free savings, providing the children in question earn less than the national personal allowance.  It will take a few simple forms to fill in and you’re away.

How Many Savings Accounts Can a Child Have?

This all depends on the type of savings account you wish to take out. If it’s just a general savings account then usually there’s no limit.  ISA rules behave a little differently to those which may apply to other standardised saver options.  The general rules for ISA saving, which also apply to adults, are that you can only open one per year.  That means one stocks and shares ISA and one cash ISA per tax year (April to April).  This at least means that you can split the yearly allowance limit between the accounts.  You’re free to change banks or building societies if you wish, but you can still only retain the one type of account each year.

What is the Best Savings Account for a Child?

It’s a very good question!  As always, the best idea is to take a close look at a variety of different banks and buildings societies to see who is offering the best rates, the most reasonable terms and the most practical options for your child’s money.  The best savings account for a child is one which will allow them to access a stock of money when they are old enough to put it to good use.  Generally, beyond that, it is simply a case of finding an account and saver option that best fits your practical needs until your children are 18!

Here are a few of the best child savings accounts available in the UK right now – but do be aware that these deals and accounts may be subject to change from time to time.

Halifax Kids’ Monthly Saver

This regular savings account lets you pay in £10 to £100 per month which allows you to keep your interest nice and healthy.  Be aware that this account with Halifax has a variable interest rate of around 4.5% representative.  Children between the ages of 0 and 15 years old can benefit from this account.

HSBC MySavings Account

At a fixed interest rate of 3% on savings of up to £3000, this easy-access account allows children to withdraw money but will need adult approval if they need to take out anything over £50.  This only applies to under 11s, however.  Children between the ages of 7 and 17 can benefit from this account, which has an interest rate that drops to 0.75% once you’ve saved more than £3000.

Saffron BS Two Year Fixed Rate Children’s Bond

Children between the ages of 0 and 15 years old can benefit from this fixed savings pot offering 1.65% interest.  You’ll be able to invest anywhere between £500 and £20,000, but do be aware that you won’t be able to make any withdrawals or to close your account once your parameters have been set.

Barclays Children’s Regular Saver

This regular savings account is available for children between 0 and 17 and can be opened either in branch, online or over the phone (but you’ll need a current account with the bank to do the latter).  You’ll need to pay in £5 minimum and £100 maximum per month, with a fixed AER of 3.5% interest alongside for the first 12 months.  Be careful not to withdraw if you can help it, as the interest will drop sharply to 1.51% AER for the remainder of any given month.

Can a Child Have More Than One Junior ISA?

No – it is not possible for you to hold more than one junior ISA at any one time.  You can hold a junior ISA and a stocks and shares ISA at the same time, however, you will need to split your annual allowance between them.  You can only ever hold one at any one time during a tax year.  This, however, does not mean you can’t change providers as and when you wish.

Can You Have a Child Trust Fund and Junior ISA?

No – you won’t be able to hold both a trust fund and a junior ISA for your children at the same time.  However, it is always possible to transfer a child trust fund into a junior ISA if you wish.  You will need to consult with the specific bank or building society you are partnering with to learn more.

Conclusion

Saving money for your children can be exciting and empowering at the same time!  However, there are many different accounts and options to choose from.  It is always a good idea to consider the wider market to see what’s available.  Ultimately, you’re putting money away for your children’s future – and you’re going to want the best possible protection for that money.  Take a look at some of the options suggested here and see which appeal most to you and your current situation!  It’s always important to teach our children the value of money.  You can start as early as you like!