6 clever ways to save for your child's future (2023)

Teaching children about money from an early age can help set them up for a better financial future. As part of this, it’s important to consider what to do with any money your child earns or is gifted by friends and family over the years.

There are several different options you can explore. If your child is fairly young, you might want to use a pocket money app (opens in new tab), so that you can keep an eye on your child’s spending. On the other hand, if your child is older, you might prefer to give them more independence and look for the best bank accounts for kids (opens in new tab). Then there's also savings accounts, Junior ISAs, pensions and the pros and cons of pocket money (opens in new tab) to consider.

Head of education at wealth management firm Killik & Co, Tim Bennett (opens in new tab), told us: “Young adults face ever increasing financial challenges, ranging from affording their first home all the way through to paying for life after work. Fortunately, they have one thing on their side – time. Combined with parental and grandparental support, it can be a powerful ally, especially when that support is put in place from birth.”

If you're unsure how to best start saving for your children, or whether you should open a bank account for your baby (opens in new tab), we've got you covered.

1. Open a bank account

Traditional children’s bank accounts can usually be opened once your child reaches the age of 11. They work in a similar way to adult accounts but don’t come with an overdraft. Your child might be offered a debit card or cash card with the account.

Alternatively, pocket money apps, such as GoHenry, HyperJar Kids and NatWest Rooster Money, can be opened by kids from the age of six. These usually come with a prepaid card and parents can track and monitor spending via the app.

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  • Encourages children to manage their money
  • Pocket money apps can enable parents to set saving goals and spending limits
  • Some bank accounts pay interest
  • No overdraft facility so kids can’t get into debt


  • Many pocket money apps have a monthly fee
  • Bank accounts have less parental control
  • Can't be opened from birth.

(Image credit: Getty Images)

2. Open a savings account

Many savings accounts can be opened by parents or grandparents as soon as a child is born. Depending on the account, your child might be able to manage it themselves once they turn seven.

You can choose from easy access accounts that let you withdraw your money when needed, regular saver accounts that require you to save a set amount each month for a year, and fixed rate bonds.

Finance expert at lender Cashfloat (opens in new tab), Sarah Connelly, says: “Fixed rate bonds offer a higher rate of return if you are willing to commit your savings for a period of up to 5 years. However, withdrawing your funds before the end of the fixed term will result in a substantial financial penalty.”

Another popular option is to open a Junior ISA (JISA) for your child, but funds won’t be accessible until your child reaches the age of 18. Marketing director at EQ Investors, Ben Faulkner (opens in new tab), says: “JISAs are tax-free saving accounts that allow you to save up to £9,000 each year in a cash deposit or by investing in stocks and shares. There is no tax to pay whilst the money grows inside the JISA account, and all withdrawals are tax-free.”

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  • Can be opened from an early age
  • Wide range of accounts to choose from
  • Interest is earned on money held in the account


  • JISA money belongs to the child - you cannot get back payments once they’ve been made
  • Some savings accounts have restricted access

3. Invest it

Saving money for your child over the long-term means it will have plenty of time to grow. Rather than keeping all of your child’s money in cash, it can be advantageous to invest some of it in the stock market - usually through a Junior ISA.

Founder of budgeting app HyperJar, Mat Megens (opens in new tab), says: “For the more adventurous, Junior Stocks and Shares ISAs are a great way to introduce your child to risk and longer-term time horizons for investments. These have the potential to lose value depending on what happens in the stock market or gain a lot.”


  • Can result in higher gains
  • Easy to invest through a Junior ISA


  • Higher risk, so you could end up with less money than you paid in
  • You can only pay up to £9,000 into a JISA each tax year.

4. Use a money box

A money box or piggy bank can be ideal for very young children. It can help them understand what the different coins and notes look like and how to use money to buy items. It can also be a good way to start the process of earning pocket money, helping your child to learn the importance of saving up for what they want.

6 clever ways to save for your child's future (2)

(Image credit: Getty Images)


  • Easy way to help young children start to understand money
  • Can encourage children to save
  • Good for holding pocket or birthday money


  • Children won’t earn interest on their savings
  • Money is easily accessible which could encourage children to spend it.

5. Buy premium bonds

Anyone can buy premium bonds (opens in new tab) for children under the age of 16. Premium bonds are issued by National Savings and Investments (NS&I) and rather than earning interest, you are entered into a monthly prize draw with the chance of winning between £25 and £1 million tax-free.

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HyperJar’s Mat Megens, says: “Premium bonds can be a fun way to save a lump sum for your kids. There's always the chance - however remote - that your kids could win big, and the monthly draws add some fun to the idea of long-term saving.”


  • Minimum investment of £25
  • Chance of winning up to £1 million every month
  • Your money is 100% backed by the UK Treasury


  • You might never win anything
  • The value of your original investment will be eroded by inflation.

6 clever ways to save for your child's future (3)

(Image credit: Getty Images)

6. Pay into a pension

A less obvious way to save for your child’s future is to start a pension for them. You can do this as soon as your child is born.

CEO of financial adviser platform Unbiased, Karen Barrett (opens in new tab), explains: “If you’re happy for them to wait until they retire, then a Junior Sipp might do the trick. The big attraction here is that everything you pay every year up to £2,880, receives a 25% government boost in the form of tax relief. However, the earliest they will be able to access the funds is age 57.”


  • Parents can set up a pension and it will be transferred to their child when they reach 18
  • You’ll benefit from a 25% government top-up
  • Any growth in your child’s pension is free of tax


  • Funds will be locked away until your child reaches the right age - this is currently 55, rising to 57 in 2028
  • Your investment can go up or down/

What should you consider when deciding what's best?

There are a number of factors you’ll need to consider when weighing up what to do with your child’s money, as Sammie Ellard-King (opens in new tab), founder of investment website Up The Gains, explains: “Consider factors like your financial goals, your child’s age, your risk tolerance, and your preference for accessibility of the funds.”

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Think about whether you want your child to be able to use their money as and when they need to, or whether you’re looking to build up a savings cushion for your child to fall back on when they’re older. Also consider factors such as how much you can pay into each account and who can open and manage the account.

Sammie Ellard-King adds: “It's always a good idea to consult with a financial professional to discuss your specific situation and make an informed choice that best meets your family's needs.”

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What is the best way to save for your child's future? ›

5 Ways to Save For Your Kids
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  2. Start a 529 Plan for your Kid. ...
  3. Create a Trust Fund for Your Kid. ...
  4. Create an Investment Account for Your Kid. ...
  5. Create a Retirement Account for Your Kid.
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How much should I save per month for my child? ›

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What should a kid save up for? ›

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Jan 4, 2023

What is a good amount to save for kids? ›

To decide what is best for your child, approach saving with a few considerations in mind. The general rule for saving is that a person should put at least 10 percent of their income away. Most financial experts accept this rule of thumb but point out that it is extremely general.

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How much is $5 a day for 20 years? ›

How to grow $5 a day into six figures
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5 years$10,570$11,107
10 years$24,716$27,427
20 years$68,977$86,640
30 years$148,244$214,475
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How much should you make a year to have a baby? ›

Have Enough Disposable Income. If $233,610 sounds like a lot, it's because it is. That amount breaks down to about $12,980 per year or $1,082 per month for one child from birth through age 17.

Is 1500 a month good to save? ›

Saving $1,500 a month is an excellent goal to have. It can help you build up your savings and put you in a better financial position for the future. Having this amount of money saved each month can give you more flexibility when it comes to making decisions about spending or investing.

How to invest in my childs future? ›

Investing for Kids: 5 Account Options
  1. Custodial Roth IRA. ...
  2. 529 Education Savings Plans. ...
  3. Coverdell Education Savings Accounts. ...
  4. UGMA/UTMA Trust Accounts. ...
  5. Brokerage Account. ...
  6. Contribute to a Brokerage Account. ...
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Apr 3, 2023

Should I open a Roth IRA for my child? ›

A Roth IRA isn't typically considered a savings vehicle for kids, but it should be. Roth IRAs are ideal for kids, because children have decades for their contributions to grow tax-free. And these accounts offer flexibility, too: Contributions to a Roth IRA can be withdrawn tax- and penalty-free at any time.

How many dollars should a kid have? ›

How to Set an Allowance for Kids. A commonly used rule of thumb for paying an allowance is to pay children $1 to $2 per week for each year of their age. Following this rule, a 10-year-old would receive $10 to $20 per week, while a 16-year-old would get $16 to $32 per week.

What is the $5 Challenge? ›

All this challenge requires is for you to stash away every $5 bill you get as change. That's it. If you're paying for something and the cashier hands you back a bill with Lincoln's solemn face, don't use it to buy coffee or a cheap lunch from the drive thru. Commit that $5 bill to your savings account.

Where is it best to save money for children? ›

Saving for your children
  • Children's savings accounts and savings options for children.
  • Piggy bank.
  • Junior cash or stocks and shares ISAs (sometimes called JISAs)
  • Friendly Society tax-exempt plan.
  • Child Trust Fund accounts.
  • NS&I Premium bonds.
  • NS&I Children's Bonds.
  • Children's pensions.

What age is best to save money? ›

According to Bankrate, your emergency fund should equal three to six months of bills. CNN Money suggests that you start saving for long-term retirement goals in your 20s, as soon as you leave school.

What does average family have in savings? ›

The average American savings account balance is $4,500. Between 1959-2022, the average U.S. savings rate has been 8.96%. The average household savings rate in the U.S. was only 5.1% in the second half of 2022. In total, gross personal savings in the U.S. is worth $2.3 trillion.

What is the most crucial time in a child's life? ›

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What is the hardest age to have a kid? ›

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What life should a child have? ›

For children, the right to life is the chance to be able to live and have the possibility to grow, to develop and become adults. This right comprises two essential aspects: the right to have one's life protected from birth and the right to be able to survive and develop appropriately.

What is $100 dollars a day for a year? ›

$100 daily is how much per year? If you make $100 per day, your Yearly salary would be $26,047. This result is obtained by multiplying your base salary by the amount of hours, week, and months you work in a year, assuming you work 40 hours a week. How much tax do I pay if I make $100 per day?

How much is $100 a month for 18 years? ›

This chart shows that a monthly contribution of $100 will compound more if you start saving earlier, giving the money more time to grow. If you save $100 a month for 18 years, your ending balance could be $35,400. If you save $100 a month for 9 years, your ending balance could be about $13,900.

What happens if you save $100 dollars a month for 40 years? ›

What can an extra $100 a month do for you over time? If you were to sock away an extra $100 a month over the next 40 years, you'd have an additional $48,000 at your disposal for retirement, assuming those funds generate no return at all. That's a nice chunk of money, but it's not earth-shattering.

How expensive is a newborn? ›

Some studies show numbers ranging from $20,000 to $50,000 for the child's first year of life, depending on location and household income. Beyond the general items, like a stroller, crib, or car seat, here are some estimates of what you can expect to shell out in your baby's first year.

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What is the cheapest way to have a baby? ›

Birth center births and home births are typically less expensive than hospital births,4 because there are no high-risk procedures done; only low-risk parents are eligible. So you save money by not having to pay for those procedures outright, or for any fees involved in the event you'd need them.

How much of your paycheck should go to rent? ›

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Should I save $20 a week? ›

Small amounts will add up over time and compounding interest will help your money grow. $20 per week may not seem like much, but it's more than $1,000 per year. Saving this much year after year can make a substantial difference as it can help keep your financial goal on your mind and keep you motivated.

Is it good to save $50 a week? ›

If you were to save $50 each week, that would result in an annual savings of $2,600. Over the span of 30 years, that's $78,000. That's not something you can retire on. But if you invested those savings into a safe growth stock, you could potentially have $1 million by the time you retire.

Can you start a 401k for your child? ›

In fact, many large custodians provide options for parents, grandparents, or any adult to set up an account for a minor child who has earned income. The adult can manage the account until the child reaches the required age in which the account must be turned over to the child.

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What is the best way to invest $5,000? ›

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What is the disadvantage of a Roth IRA for kids? ›

  • Any contributions you make to a custodial Roth IRA become the child's money - you can't take it back if they act irresponsibly once they control the account.
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Sep 2, 2022

What age is best for Roth IRA? ›

You're never too old to fund a Roth IRA. Opening a later-in-life Roth IRA means you don't have to worry about the early withdrawal penalty on earnings if you're 59½. No matter when you open a Roth IRA, you have to wait five years to withdraw the earnings tax-free.

What is the best account to start for a baby? ›

Custodial accounts

If you're looking for the most flexible and tax-efficient investment account for a baby, one of your best options is going to be to set up a UGMA custodial account. A UGMA custodial account is an investment account that enables an adult to hold assets on behalf of a child until they come of age.

What are the 5 keys to success for kids? ›

YCDI's mission is to strengthen the five social and emotional skills and values (the “5 Keys”) which all children need to manage their own learning, behaviour and emotional well-being including: Confidence (work, social), Persistence, Organisation, Getting Along and Resilience.

What is the strongest factor of a child's success? ›

Accountability and self-reliance are two extremely important characteristics in successful people. Learning to take accountability is difficult and uncomfortable, which is why it is incredibly important for a person to learn how to do it early. A child can learn accountability without major consequences or judgment.

Which child is usually the most successful? ›

First-born kids tend to be leaders, like CEOS and founders, and are more likely to achieve traditional success. Middle-born children often embody a mix of the traits of older and younger siblings, and they're very relationship-focused.

How much money do you give a 10 year old for Christmas? ›

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What is the average amount of money to raise a child? ›

By any measure, raising kids is expensive! As of 2022, the average cost is around $288,094 total, or $16,005 per year. Of course, there's no one-size-fits-all. Costs will vary with each household, and the per-child cost may be lower for you if you have multiple children.

How much is $20 a week for a year? ›

If you make $20 per week, your Yearly salary would be $1,040.

How much is $10 a week for a year? ›

$10 weekly is how much per year? If you make $10 per week, your Yearly salary would be $520.

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How do I set my child up financially? ›

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What is better 529 or custodial account? ›

In general, it's likely better to give money to people using custodial accounts because it's a gift that comes with no restrictions or strings attached. The heavy restrictions of a 529 are only worth dealing with if the tax benefits are very high and you're certain that the recipient will use the money for education.

Can I start a Roth IRA for my kid? ›

A Roth IRA for Kids can be opened and receive contributions for a minor with earned income for the year. Roth IRAs provide the opportunity for tax-free growth. The earlier your kids get started saving, the greater the opportunity to build a sizeable nest egg.

What are the disadvantages of a custodial account? ›

Disadvantages of Custodial Accounts

A minor's ownership of the custodial account can be a double-edged sword. Since the holdings count as assets, they may reduce a child's financial aid eligibility when they apply for college. 3 It could also reduce their ability to access other forms of government or community aid.

Why is a 529 worth it? ›

And when you pull the funds out, as long as they're used for qualified higher education expenses, there's no federal income tax on the distribution, and often no state income tax. 529 accounts also receive some favorable treatment for financial aid purposes, so they're really a great way to save for college education.

What are the cons of a custodial account? ›

The chief disadvantage is that custodians lose control of the money once the minor reaches the age of majority. Having custodial accounts can also negatively affect the financial aid prospects of a child.

Which bank gives 7% interest on savings account? ›

While 7% with Landmark Credit Union is the highest available interest rate, other high-yield savings accounts exist and may be more worth it based on each bank's unique requirements.

What is the youngest age to open a Roth? ›

What Is the Youngest Age You Can Open a Roth IRA? There is no age threshold or limit for Roth IRAs, so anyone can open and fund an account.

What type of account should I open for my child? ›

Minor children by law can't open a savings account. They need a parent or guardian to set up a custodial or joint account. A custodial account is the property of the child, but managed by the parent until the child turns 18.

Can you gift a Roth IRA before death? ›

You can't directly give a Roth IRA account to someone else, but you do have a few similar options: You can withdraw money from your own Roth IRA to give to someone else. You can leave a Roth IRA to a beneficiary when you die. You can contribute to someone else's Roth IRA.


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