5 Best Ways to Save Money for Children

Last updated on November 5th, 2023 at 08:52 pm

Like you save money for your future, you also need to think about children too. Save money for children you never what tomorrow shall bring in life.

And the earlier the better because when they are still young saving money is easier compared to when they have grown up spending much on education and other basic needs of life. Honestly, The practice builds a saving culture in the family hence planning children’s future earlier.

It’s very possible to save for children when you do things right using trusted children’s savings accounts with the best interest rates. As a parent in the future, you won’t stress a lot in terms of children’s education, medical, fun, and more.

Best practice, as said before you need to start early to plan for your kids to save enough. There are different ways you can save to make the most out of the savings plan as advised.

Define a Child Savings Account

This is an account opened up by an adult or a minor to make savings for future plans. The best part is that money saved compounds since there is an interest rate attached to it every year, the more you save the better.

Best Ways to Save Money for Children

Honestly, you need to save for your children to secure their future financially, and it can be done through a number of savings accounts as we are going to see in detail.

Hey, it’s not just about saving but you need convenience and the best interest rates to grow savings over a period of time. The savings account of your choice should be in line with your budget for consistency.

So, you can save money for your child directly at the bank, microfinance institution, or through money-saving apps, whichever is convenient.

1. Regular Savings Account

Through this account, a specific amount is saved for the child every single month for a year or as agreed. And compared to other accounts, there’s a minimum and maximum amount to be saved.

If you’re after children’s savings accounts with the best offers in terms of interest rates and convenience, a regular savings account can be put on the priority list despite some drawbacks like limiting access to money within the period of activity.

2. Instant Access Savings Account

Here the money saved can be accessed at any time hence it’s like a normal account, you don’t have to get strapped with cash when you have some savings.

Compared to a regular savings account, the interest rate offered is very low and not the best option for people who want to save long-term to grow their children’s savings.

3. Fixed Term Savings

Another type of savings where you can get the best interest rates is fixed-term savings. With this account, the savings are made with a fixed-rate bond for a period of 5 years.

Because of the hefty interest rate penalty charges, you don’t need to think about making withdrawals before a five-year period. Compared to other children’s savings accounts here deposits are made only once and withdrawals are made at maturity.

4. Invest In the Stock Market

Another great way to save money for your children’s future is by investing in listed companies on the stock market and buying shares. This can be done with a junior ISA for stocks and shares and it has some of the best returns.

Like any other investment, there are challenges involved and it’s advisable you talk to a finance professional before investing any money for your child’s future here.

5. Junior Individual Savings Account (ISA)

This is a tax-free account where you can also save money for your child’s future. It’s an affordable savings account with better interest rates for children’s savings compared to a normal savings account.

Because you save money on behalf of a minor, when he or she turns an adult the account changes into the child’s name as an instant access individual savings account.

Alternative Ways to Use to Make Savings for Children

Piggybank

You can decide to start with a piggy bank if you’re not into serious savings with a compounding effect of interest rates. A piggy bank helps the child to be hands-on since he or she personally does the savings.

Compared to other types of savings, it’s not a long-term saving strategy to use but it’s a good start to save without an account until when you switch to a compounding account.

Children’s Pension

Here you make savings for your children for old age and they get access to it when they are 57 years old. Yes, they can only use the savings when it’s the right time for their well-being.

In the United Kingdom children’s pension returns on savings are tax-free but at the time of retirement, withdrawals are charged income tax.

The Importance of Saving Money for Children

The importance of saving money for children doesn’t end with you as a parent, children are the key beneficiaries here. It’s therefore good for the parents and the children as we are going see.

• Develops a Saving Culture in Children

By the time kids become adults they already have a saving culture in mind and can survive on a tight budget. That’s why it’s best practice to involve the children in the saving process at all stages till they become adults.

Yes, they learn more when they are involved and get to see what saving money can do in terms of compounding over a period of time.

• Secures Children’s Education

Without savings, you’re not guaranteed about your children’s future education. Education is becoming more expensive nowadays compared to way back in the 80s and 90s.

Saving money for your children’s future is the best way to secure your children’s future education. This will save you a lot in the future compared to raising money from scratch for further studies.

• Self-Dependence

With some savings on the side, kids won’t need much assistance from anyone when they are living alone in the future. And the moment they start making their own money life becomes easier since they don’t start in debt.

Self-dependence instills financial discipline in children which helps them get through hard times in life without any regret.

• Early Retirement

Do you know that saving money for your child’s future can save you from late retirement? Yes, you won’t have to stretch to the limits with money pressure.

Being that you decided to live cheaply to save for kids early enough, parents you can opt for early retirement since you don’t have many responsibilities.

Most parents work to ensure that their kids get a good start and when that is done it’s the beginning of a new life. Early retirement doesn’t end with parents but also the children are most likely to retire early too.

FAQs

What Do I Need to Open a Children’s Savings Account?

Before opening an account you need to know where and how to do it whether online, by post, or physically going to the preferred service provider in case you’re not an account holder there.

If you’re not an account holder with the service provider, you’ll have to submit identifications for the child and yours in person for example birth certificate, passport, proof address, and any other required document.

Which Categories of People Are Allowed to Open up Children’s Savings Accounts?

There are different categories of people who can open up a children’s savings account but this most times depends on the service provider’s terms of service. But in brief, Parents, grandparents, guardians, and 7-year-old children can open up an account to make future savings.

What Are The Best Money Saving Apps For Kids?

Sometimes you don’t have to stress doing everything yourself when kids can do the work themselves through mobile apps. Let’s also look at some apps that will make your child financially mindful.

• FamZoo

Despite being a paid app, it’s worth introducing it to your child to learn the basics of personal finance and money. Using FamZoo the child gets to learn about budgeting, saving, and other money best practices at an early age.

• Stockpile

Another great money-saving app for kids to make future savings is Stockpile, through the app, families are informed about making future investments. Using Stockpile Parents or guardians are required to approve the child’s investment decisions.

• Gohenry

It’s an app with a kids’ debit card connected to it and parents can work in hand with them in managing their finances. Parents can reward their kids through Gohenry and at the same time control their spending behaviors.

How Much Do I Need To Start Saving For My Child’s Future?

To start saving for your child’s future you don’t need a lot of money though start-up savings might depend on the service provider and account type you’re using for example $10, $100, $500, or more.

Closing

Every parent or guardian would like to see his or her child grow financially to have a decent living, but all start with the discipline learned at an early stage. Saving is one of the best money practices children should adopt straight from the time of planning for their future.

As a parent, you don’t have to work out investment plans for your child without involving him or her to learn the whole process despite some areas where age is a limiting factor.