How can I help my child save money?

One key aspect of parenting is helping your child become independent and self-sufficient as they grow up. An important element of this is by helping them understand money and giving them a headstart with saving.

This helps your child not only become comfortable with managing and talking about money but also helps them begin their adult life with a healthy amount of savings already in the bank.

Let’s take a look at four ways you can help your child become confident with money and start saving early…

1. Open a savings account for your child

Most high street banks offer dedicated children’s savings accounts – each will have their own selling points and features so it’s worth researching the market and thinking about which providers offer the most competitive interest rates.

It’s also important to think about the restrictions that different accounts offer, as some will require minimum monthly deposits and others will have limits on the maximum balance allowed.

Another thing to consider is how easily accessible is the account for yourself and your child. Some providers may require you to visit the bank branch to deposit or withdraw money, whereas others may offer online banking and even debit cards for young people.

Choosing the right savings account for your child depends on a number of factors, in particular the child’s age. Ask yourself what you want to achieve by opening this account, what you believe is appropriate for them and how much parental control you might need.

Once you’ve set up a savings account for your child, encourage them to start putting money away regularly. This doesn’t have to be a large amount, as even just a few pounds a week can make a difference in the long run and get them into good habits.

2. Open a Junior ISA

Another option that can yield higher returns than traditional savings accounts are Junior Individual Savings Accounts – or ISAs.

There are two types of Junior ISAs, each with their own pros and cons.

Cash Junior ISAs

Cash Junior ISAs are a good, steady option if you want to invest in low-risk assets such as cash and bonds and are very easy to access. However, they do sometimes offer lower interest rates than savings accounts.

Stocks and Shares Junior ISAs

Alternatively, Stocks and Shares Junior ISAs could be the right option for you and your child. These ISAs allow you to invest in the stock market and generate larger returns.

Naturally by the nature of this type of investment, it carries a certain level of risk, so it’s worth thinking beforehand about how much exposure to risk you and your child can withstand.

Junior ISA annual allowance

The maximum amount you can put into a Junior ISA is £9,000 a year, while any interest and gains you earn in this account will be tax-free.
Once your child turns 18, you can then transfer Junior ISAs to adult ISAs, so they can begin adulthood with money in the bank.

3. Set up Premium Bonds

Premium Bonds are an investment product issued by National Savings and Investment (NS&I) where you’re entered into a monthly prize draw.

The more bonds you have, the better chance you have of winning a prize worth anything from £25 and £1 million – and any winnings are tax-free.

Premium Bonds are a fun way to save which is why they’re a great choice for children, but there is no guaranteed returns or regular income from them. You can also cash in your Premium Bonds at any time with money reaching your account within three days.

4. Put coins in the piggy bank

Whilst there are more financial products available for children now, a piggy bank is a great introduction to the idea of saving, particularly for young children.

With a piggy bank, children can see firsthand how a little bit of money put aside regularly can grow into a larger amount, which helps them to develop a healthy attitude to saving long-term.

We’re here to help

If you have any questions about helping your child learn good financial habits and start adulthood with good foundations in place, please don’t hesitate to get in touch.

Our specialist financial planners can help you find the best options for you and your family, so your entire household will have a positive mindset and approach to money for many years to come.