Child Savings

It doesn’t matter if they’re teenagers, toddlers or tots; it’s never too early for children to start saving for their future. What with escalating student loans and dwindling pensions, the importance of making provision for one’s future gets a little more pressing by the year. And the surest, safest way to lay the foundations of a successful financial future is to start a child savings account. Start ‘em young and, hopefully, they’ll retain the savings imperative throughout their life – helping them to achieve financial independence and long term security.

Unless your child is a financial prodigy (or over the age of eleven), you’ll need to open their account on their behalf. Child savings accounts are available in all sorts of shapes and sizes – so you can tailor yours to your child and their particular needs. Of course, determining what their needs are goes beyond deciding between the free teddy bear or CD offered as inducements by some online accounts! Indeed, you’ll need to consider pretty much everything, ranging from the best rates of interest, to assessing the ease of withdrawals (and that’s particularly important if you’re giving or restricting access to their account.) Bear in mind that the greater the ease of access to the account, the smaller the rate of interest on that account is likely to be. By contrast, ‘notice accounts’ require advance notice of your intent to make a withdrawal, and can restrict the number of withdrawals on an annual basis; but they do offer a considerably higher rate of interest.

One of the best aspects of an online child savings account, as far as the older kids are concerned is that they’re easy to open. That means if they’re keen to take on the responsibility for some measure of financial responsibility from an early age, they can. Most accounts can be opened with as little as £1, putting savings accounts within reach of young money makers everywhere. (The good thing from your point of view is that with child friendly web sites and savings incentives, your child will really get a taste for saving, rather than spending.)

Of course if you really want to give your child a good start in life, you’ll probably want to consider child savings trust funds or bonds. Bonds can give a higher rate of interest than conventional savings accounts, simply because the funds are tied up for a set period; potentially until the child reaches eighteen. Bonds are low cost, low maintenance plans and accrue plenty of tax free interest – giving your chid a very healthy return on your investment.

Or how about a child trust fund? Any child born on or after September 1st 2002 automatically qualifies for a government voucher to the tune of £250. Better yet, the government automatically issue further vouchers at age seven and, depending on circumstances, may even issue a third and final voucher when the child reaches secondary school age. You can of course opt to top up the fund yourself (by as much as £1200 a year). Left untouched, the child trust fund grows year by year, free of income and capital gains tax until your child turns eighteen; at which point they decide how the money is used.

You might also have heard about the National Savings and Investment scheme (NSI). Take a look at our page devoted to the NSI for more information on how you can utilise the government scheme to your child’s best advantage. With more ways to invest and more options to suit you’ll see that it’s easier than ever to invest in your child’s future, without gambling on the present.

However you decide to do it, investing in your child/children is one sure fire way of ensuring they can meet that future with confidence.