It may be the month of spending but in these often difficult financial times, it is becoming increasingly hard to manage savings and funds effectively. With huge student loans, sky-high mortgages and bills bills bills, what little we can put aside rarely amounts to much. So for those of us trying to help out our children, how exactly can we maximise their future savings?
Finding out which banks provide the best junior and savings accounts can be very confusing. There are now so many options that it can be difficult to decide which one is best, if any!
For example, do you want to create an account that can only be accessed by your child when they are 18? On the one hand this will stop anyone from being tempted to borrow money if in need, but on the other hand what happens if your kid comes of age and decides to blow all that hard-earned cash in Stringfellows?
Or do you want them to have an account from an early age which they can technically dip into at any time?
Whichever way you choose to save, if you put a little bit aside each month by the time your child reaches an age where they will want to go to university, start a business, go travelling, or buy a car, you will have hopefully accrued an amount significant enough to help them out.
And if you are worried about your child going a bit nuts when they find out you’ve saved a wad of money, the answer is simple.
DON’T TELL THEM! Just casually listen to their business/travel plans and nod along with their noble intentions to save money and then help them out as you see fit!
So what exactly are the banks offering?
The Halifax offers three different types of savings for children, all with varying interest rates. You can open a Junior ISA, a Kid’s Regular Saver (money each month via standing order) or a Young Saver (child can access account with their own card from the age of 7).
Barclays offer a Children’s Instant Saver and a Children’s Regular Saver account. The instant saver allows for easy access whilst the regular saver offers a higher interest if you make less withdrawals. Both are accessible to the child to manage their own money.
HSBC don’t offer a specific future savings account. Instead they have something called MyMoney which comes in two parts and allows 7-17 year olds to save and spend as they please.
Santander have set up the 1|2|3 Mini Accounts which include a current account for 11-18 year olds and an account in trust for children under 11. The idea behind the 1|2|3 Mini Zone is to help children learn how to independently manage their money.
Lloyds provide a Junior Cash Isa for children under 18 which will mature into an adult cash ISA. They can then either withdraw the money, transfer it to a new ISA or close the account. There is also the Young Saver Account for children to save and manage themselves with the help of an adult.
Nationwide offer the Smart Junior ISA designed to help give children a helping hand when they reach 18 by building up tax-free savings. The Smart Children’s Savings Account allows a child aged between 7 and 18 to open the account in their sole name, or a parent or guardian can open an account if the child is under 16. Also on offer is the Smart Limited Access which is ideal for those who don’t need regular access but with the reassurance of access should they need it.
All the above banks offer different interest rates, some fixed, some varied so it’s a good idea to compare and contrast on a regular basis.
In essence, it seems that a cash ISA saving would be a useful use of your cash-free ISA allowance (after your own savings for say property and pension). If you were, after that, in excess of your cash free ISA savings allowance then a junior ISA could be used additionally, but would be accessible to your child at 18 to do what they like with. Of course you can also invest in bonds and other trust funds but you would have to ask each bank exactly how they go about this.
Whatever your needs, hopefully there will be at least one bank that can fulfil them. And don’t forget to keep saving a little bit for yourself as well. We all want to give our children the best start in life but that doesn’t mean we have to sacrifice our dreams of sun-soaked retirement!
So how do you save for your baby’s future?
For more information you might want to check out Money Saving Expert who regularly compare and contrast children’s accounts and give the latest details on interest rates.