There are many different ways to contribute to a child’s financial future including savings, premium bonds, investments and pensions.
Savings options for children
Parents and grandparents can help to encourage children to save early to create good money habits and afford special items. Over time the interest earned, even on small sums, can add up to create the deposit for a car or flat, or ensure a child’s future financial security.
The benefits of saving
Saving a little each month can help children learn about the importance of managing money in future. There are many benefits to opening a savings account for your child, including:
creating positive saving habits
providing a safe place to keep money
helping children set and work towards financial goals
allowing children to earn interest, which can grow over time - even on small sums
supporting future financial security
Ways to save
Children's savings accounts are a great way to put away money for your younger ones. Or encourage them to save with their own savings account.
It’s never too early to teach them about money. For 11-to-15-year-olds who want to save, spend and learn with parental oversight.
We all strive to protect our children. There are steps you can take to plan ahead, to provide them with financial stability in the future.
Premium Bonds are savings bonds, which can be purchased for as little as £25. Issued by the UK government they offer tax-free prizes instead of interest. Bonds can be bought for children under 16 if you are their parent, legal guardian or grandparent, up to a maximum holding level of £50,000.
Any parent or legal guardian can set up a child pension. The child can access these savings when they reach the age of 55. This is set to increase to 57 years old in 2028, and may change again in the future. You can save up to £2,880 tax free in each tax year. The government then tops this up by 25%, taking your yearly total to £3,600. Any growth is tax free. Like any investment, your fund value can go down as well as up.
If a child was born between 2002 and 2011, they might have a Child Trust Fund. These were replaced in 2010 by Junior ISAs, but existing accounts can still be paid into, or parents can transfer savings to Junior ISAs.
The account can be managed by parents or guardians until the child reaches 18, at which point it can be cashed or transferred into an ‘adult’ ISA.