Saving for your children’s future allows you to help them when they need it, whether it be for their first car, university costs, their wedding or a deposit for a house. Putting a little by each month starting when they are young means you build up a nice lump sum over the years. Here are some top tips for saving for your children’s future.
Children’s saving accounts
You can set up an account in your child’s name at a bank or building society and then save a little each month. Even saving just £10 a month for 18 years will create a healthy lump sum.
There are usually two types of savings account for children:
- Instant access – this allows your child to withdraw money at any time.
- Regular saver – these encourage you to make a regular deposit for a set number of years. They often have higher rates of interest, but there may be a charge if you want to withdraw money early.
Whichever type of account you choose, it’s worth shopping around to ensure you get the best interest rates. It’s also a good idea to set up a direct debit or standing order to make a set payment each month so that you build savings consistently.
NS&I Premium Bonds
Unlike other investments or savings, you don’t earn any interest on Premium Bonds. Instead, your bonds are entered into a monthly prize draw, and you can win between £25 and £1 million. Prizes are tax-free and the more bonds you have, the more chance you have of winning.
You can buy a minimum of £25 and a maximum of £50,000. On average someone with a £1000 investment wins £25 a year, but this is not guaranteed. Some years you may win nothing and others you could win more. Prizes can be claimed straight away or used to buy more bonds.
Although you are not guaranteed to make any money on your premium bonds, they are backed by the treasury, so they are 100% safe. This means that they never lose any value. You can sell them at any time and get your money back.
Junior ISAs let you save on behalf of a child under the age of 18, and the interest you earn won’t be taxed.
There is an annual limit on how much you can invest but parents, friends and grandparents can all pay in as long as you stay under the annual limit.
When your child turns 18, they can withdraw the money or transfer it to an adult ISA.
Tips for building a bigger lump sum
Ask for monetary gifts
When your children are small and don’t need much, you can ask friends or relatives to give a little bit of money toward your child’s savings rather than buying a gift.
Sell old clothes and toys
Children can quickly outgrow clothes, books and toys. As they do, sell anything they no longer use and put the money into their savings account.
Teach your children to save
Investing in your children’s financial future doesn’t just mean saving money for them. Teaching them about money management at an early age helps them make better money decisions when they are older. Teach your children about saving money. Let them see their account statements and encourage them to save some of their pocket money or birthday money.
Try and be consistent with saving. Decide what you can afford each month and put it into savings as soon as you get paid. Don’t wait until the end of the month as you might struggle not to spend it.
Whenever you can afford to, put a little extra into your child’s savings. You may be tempted to spoil them with treats when they are young, but the money might be needed for something more important when they are older.
About Morses Club
At Morses Club, we want to help you get more control over your finances, and we hope these top tips can help you reduce your spending. You can find more money-saving tips on our blog.
For those times, when emergency expenses crop up, or your budget isn’t quite stretching far enough, you may benefit from one of our quick cash loans. Our small loans aren’t the right solution for everyone, so it’s important you understand how it works before you apply.