Top Tips for Saving for Your Children’s Future

Published: 21/08/2019 and written by J Bell


save money for children's future

At Mr Lender, we offer short term loans between £200-£1,000.

Think saving for your child’s future before they can even walk is too early?

Think again! It’s never too soon to start building a nest egg for your kids. Here at Mr Lender we appreciate how expensive having children can be – but you don’t need to squirrel away much to start building a foundation that will grow with them – and they will certainly be grateful when they have a lump sum ready and waiting to put towards university or their first house or car – or maybe even a robot by that time!

And once they’re old enough to understand, it’s important to talk to your little ones about cash to help them appreciate the best ways to handle it.

Kerry Dean, vice president of Direct at BMO Global Asset Management says: “Help your children understand the difference between spending today and saving for the future. Have practical conversations using small coin denominations to help them get used to handling cash.

“And when it comes to saving for them, start early; investing as little as £1 per day can build a nest egg for your child, and a savings pot of £30 per month could soon grow into a considerable sum over a number of years.

“Whichever savings route you pick it’s important to think ahead about a child’s future and when they’ll need to access the money.

“Regularly setting money aside for children from a young age can really give them a financial ‘leg up’ in life – starting early can reap the benefit of compound interest.”

We’ve put together a guide to a host of options open to you – so take a look, decide which one works best for you and your family and then get saving!

First Thing’s First – Get the Whole Family Involved


It’s lovely that Aunt Joan wants to keep buying the baby new outfits – but how many can a newborn realistically get through? And when they’re older it’s great to have a host of toys to keep them occupied – but once the house starts getting overrun with train sets and cuddly Peppa Pigs, it might be time to start asking well-meaning relatives to put the money towards something that will help your children in the long-run instead.

Dilusha Hettiralalage, consumer savings expert at says: “When your child is a baby or a toddler, it’s perfectly okay to ask for money instead of gifts when it comes to their birthday and Christmas.

“They’re likely to get lots of toys, they’re too young to understand what’s going on, and the money would be better off put into an account that the child can have access to when they’re older (hopefully the money will accrue interest over the years so that £5 or £10 gift could turn into a tidy sum).”

You can ask relatives and friends to use one of the options below to start saving for your child’s future themselves, adding in a little more every birthday and Christmas – or ask them to give you the cash to invest into whatever option you choose for your children’s savings.

Junior ISA (JISA)

A Junior ISA lets parents save up to £4,368 a year (£84 a week) in a tax-free savings account. The cash can only be accessed by the child once they turn 18.

Just like an adult ISA, a JISA can be held in cash or stocks and shares.

Kerry Dean says: “Junior ISA subscriptions are increasing, so that’s great news for children.

“However, many parents are still opting for Cash JISAs for their children – almost six in ten according to HMRC data – despite historic figures demonstrating that stocks and shares accounts may ultimately outperform cash.”

BMO Global Asset Management has more information that might help you figure out whether a cash or a stocks and shares JISA is the way forward for you

Start a Pension

Yes, that does sound even more ridiculous than opening a savings account for someone who has only been on the planet for five minutes – but you could make your kid a small fortune by starting a pension pot when they are born!

You can put a maximum of £2,880 into a junior self-invested personal pension (SIPP) for each child every year – tax-free.

The Government will then add £720 in tax relief – boosting the total to £3,600. That’s a 25% growth.

Obviously not everyone can afford to squirrel away that amount every month but contributing what you can – no matter how little – will still create a handsome pot for their retirement.

Children’s Saving Accounts

You can set up an account with a bank or building society on behalf of a child – which they can start managing themselves from as young as seven-years-old.

Having their own account can help make them more money-aware and encourage them to develop good savings habits.

Premium Bonds

Everyone has a £3,000 ‘gift allowance’ available every year, which allows parents, grandparents and friends to give money away without it incurring inheritance tax as long as they live for seven years from gifting the cash.

Parents, legal guardians, grandparents and great-grandparents can invest between £25 and £50,000 into a Government-backed savings product run by National Savings & Investments (NS&I).

Also, account holders are entered into monthly draws for cash prizes of up to £1 million. In the last ten years five children – the youngest aged just three-years-old – have scooped the £1 million Premium Bonds jackpot!

Savings Pot

Child's savings tin

If all of the above is a little daunting right now, you can always go back to basics and get your little one a savings tin to get them started!

It’s a great way to help them appreciate the fact that money is not a toy and that you need to keep it in a safe place. You can also use it to help them learn the value of different notes and coins.

Mr Lender is a multi-award winning lender and is rated five stars on Trustpilot by customer reviews. So why would you choose anyone else for your short term loans?

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