Many parents would like to save for their children’s futures, whether that’s to help with the costs of university, or just to help reduce the amount of debt that their child may face in the future.
The good news is that there are lots of savings and investment products available which are designed specifically for saving for children. They offer a place where parents can put money aside now – which can help make a big difference to a child’s future.
Child Trust Funds
If your child was born from 1 September 2002 to 2 January 2011, they will be lucky enough to benefit from a Child Trust Fund (CTF) account.
Child Trust Funds offer a popular way for parents to save for their children in either a cash or shares based account.
The great thing about Child Trust Funds was the initial payment in the form of a CTF voucher from the Government – which was used to kick start the account and helped to provide that initial “nudge” to encourage parents to start saving for their child’s future.
If your child is fortunate enough to have a Child Trust Fund, the good news is that the contribution limit has now increased – meaning that you can now save up to £3,720 a year for them – in a tax-efficient way.
If your child has a CTF with The Children’s Mutual, make the most of it by adding a little to their CTF account now.
Although Child Trust Funds are no longer available, the Government announced in 2011 that Junior ISAs would replace CTFs for children born on or after 3 January 2011 as well as children under 18 and born before September 2002.
There are two types of Junior ISAs – cash and stocks & shares – and your child can hold up to one of each at a time (two accounts in total).
Unlike Child Trust Funds, Junior ISAs don’t offer the initial payment from the Government. However, they do provide a way for parents to save up to £3,720 a year for their children tax-efficiently.
Using a Child Trust Fund or Junior ISA to save for your child’s future can provide you with an easy way to put money aside for them to use when they reach age 18.
Saving just £20 a month into one of these accounts could mean that your child would have a really valuable lump sum at 18. Find out what your child’s savings could grow into by putting aside a little each month.
The Children’s Mutual
The Children’s Mutual is one of the first providers to offer the Junior ISA, a Government initiative savings and investment product specifically geared for families with children.
Encouraging your child to save
As well as addressing the cost of further education, “encouraging their child to save” is a popular reason for parents to save.
Often, receiving pocket money is a child’s first experience of managing money. Pocket Money is a great way to help children learn how to handle money sensibly. We even have a special pocket money section of our website to help encourage children to manage their pocket money and save for things they want.
By opening a savings or investment account for your child you can build on this and at the same time teach them about the importance of saving for their future at an early age.