Saving money for child’s future - where to save?

[Cocacolathanks]

Hello,

This might seem really stupid but I’ve only just realised how financially ignorant I have been. I live comfortably with my husband and 2 kids but we have minimal savings, maybe about £3000 currently. Covid hasn’t helped.

I’ve decided I should do more for my children so that they have a sum of money when they’re older. I don’t know how naive this might sound but I don’t want to get into any interest-related schemes/cards.

I was thinking of opening a normal bank account (maybe under my own name) for both kids (or possibly one account for both which I can later split up) and just adding even £1 every few days, wherever and whenever I can.

How should I do this? Do I open a specific savings account (don’t they involve interest payments?) or shall I open a normal account?

Interested in hearing how you all save for your children!

thank you

Bump

I've been putting a tenner away a month. I'm hoping that I can add more over the years but at the moment even that adds up. Slowly.

Are you saying you don't want to earn interest at all? So the money will be worth less and less as no interest payments to offset at least some inflation?

Child’s isa account is what we use. It turns over to them at 16/18ish.

It doesn’t make sense that you don’t want to get interest. Is it religion related? If so, then you might be able to google specific products.

Most people, opt for things such as junior ISAs. They can be either saving accounts or stocks and shares investments.

If you’re older parents, it might work well to add more to your pension and then take out an early lump sum to help children.

It also probably makes sense to have an actual budget rather than adding a pound here and there.

Premium bonds. You can set up a minimum standarding order for £25. They will be in your childrens' names but you as the guardian of them. Alternatively put them in your name and divy it up later. You could win £1m!

@OhioOhioOhio and are you putting the tenner away in cash, in a bank account, into a savings account? That’s my main concern as I don’t know where to save.

@PiggyPokkyFool I honestly didn’t think of the money’s worth decreasing over time. Like I said, I’ve never handled much finances myself and am not very knowledgeable:m. Thanks for pointing that out. Will consider it too.

Standing*

When you said no interest did you mean no interest (for religious reasons?) or did you mean no risk / no shares?

Either way I'd say save in an account in your name which you privately earmark for the children. This has 2 benefits: a) if you need the money you can access it, and b) you don't have to give it to them at 18 you can hang on to it until you think the time is right.

Mind you, interests rates are rubbish at the moment anyway from a saver's point of view.

They each got money from relatives when they were born but the eldest got the most. I'm topping up the other 2 accounts with £10 a month as I can afford it. I just put another 10 in now. Just normal bank accounts for now. There really isn't much. It's more for expensive school trips rather than further education. It's a start. I hope.

Just open a child saver account with your own bank for either both or just one child and as you suggested, split out at a later date - ISAs, as far as I know, are accessible by children once they reach 18 and without parental signover and may not be ideal.

I have kids saver accounts for my children DS and DD - opened when they were born and all birthday and Christmas money goes in as well as a sum of money from my account by standing order monthly. This all adds up annually.

Saving for the future is wise and I’m always thinking of how I can add even more to their accounts. I have a money bank in the kitchen for all change - so anytime there is change in pockets, I pop it into the money box and let it build up before splitting between the accounts.

Best of luck with your savings plan.

Just opened a normal back account for my daughter NatWest when she was almost 5. Interest rates are rubbish but I found it hard to open an account for her so just thought I'd open one with mine as not as much I.d needed and much less hassle. Who knew it'd be so difficult to open a bank account these days

Hi @Cocacolathanks - but you are not answering the questions people are asking.
Why do you not want to earn interest? Is it against your religion?
If so maybe an Islamic bank would suit - if you let us know I'll find a good one and post a link.
If there is another issue tell us and we'll suggest something else.

I went for a child ISA as once the money goes in it belongs to the Child and cant be accessed by anyone else including me. It means if I'm having a bad month financially there is never any temptation to 'borrow' money from his savings

There are various options - a simple savings account, Junior ISAs or bonds - if you go on the Martin Lewis websites, he explains the various options.

I decided to take a very long term view and started pensions for both my DC.

I think you need to decide first if you want the savings to be in your name (so that you can spend it if need be or choose when to give the money to them) or in their name (where you can't touch it and it belongs to them when they are 18). When mine were small I chose the former (savings account in my name with best interest rate - see Martin Lewis website or e.g. money saving supermarket) as money was tight and I was worried it might give them temptation to buy a motorbike or just blow it when they were 18. Now mine are teenagers I feel a bit more confident that they would use it for something sensible (e.g. both keen to go to uni and/or learn to drive) so am saving in their name as interest rates are better (Junior ISA).

As PP suggested, kids savings accounts are quite good - you can hand them over as and when you choose.

Halifax, Santander etc. do them. None have very good interest rates, but they are good for putting in a few pounds here and there. I put in £35 per month for DD and DS and it all adds up over a few years.

How do you start pensions for your children?

As you are totally new to this, it might be good to start with Martin Lewis’ guides. Don’t be put off by the number of different types of account, it’s worth a read:

www.moneysavingexpert.com/savings/child-savings-tax-free/

Children’s savings accounts pay much better interest than regular accounts.

My two have savings accounts with Halifax - essentially there are 2 accounts, one which pays a higher rate of interest which you can pay a max of £100 per month into and a second account with a lower rate which you can pay more into. Once a year, on the anniversary of the account being opened the money from the higher rate account is swept across to the lower account.

We pay a standing order into the monthly accounts and any gifts of money are paid into the other account. The accounts will be accessible by the children when they are 16.

We opened the accounts when the DC were a few months old so hopefully by the time they are 16 there will be a sum decent enough to help with uni/buy a car/put towards a house deposit etc.

www.halifax.co.uk/savings/kids.html

We have a Future Saver account for DS with a major bank. It’s not a great rate of interest but we set it up when he was tiny as I knew if I didn’t do it then I’d never get round to it.

We wanted something for him but that would remain in our name when he turns 18, so he can’t blow it (check these rules on whatever you open).

The rules of the account are the money must be spent on him, but that we control it.

If he goes to uni it’ll go on halls rent/living costs/a Masters. Anything left can go towards a house deposit and maybe a holiday if he does well at his A Levels or degree. But he won’t be given it to blow on rubbish.

I don't have kids but I put money aide to a mutual fund for my nephews and godchildren. I've picked low risk mutual funds that is a collection of different funds managed/picked by the bank. All I have to do is to transfer money to there and that's it. It is quite low risk and and interest is higher than regular account.

You could do a simple cash isa in their name.