There are very few feelings better than knowing you’ve given a child a head start in life.
Once our own finances are a bit more secure, the next thing we often think about is saving for the future of our children or grandchildren.
From helping to fund a new bike or games console, to setting them up to pay university fees or perhaps a first-home deposit – even small savings now can make a big difference tomorrow.
In this blog, we’ll look at some of the savings options you can consider for children, and how we can help you to get started.
How to start saving for your children or grandchildren
Knowing where to start can be a daunting task. The first thing to think about is if you want to open an account in their name. This means that they own the funds. Or you may opt to put money aside in your name and give it to them later.
If you choose to open an account under the child’s name, not only do they own the funds, but it can help to give a purpose to the money. If the goal is for education or a first home for example, it means it might not be as tempting to dip into the funds earlier than that. That said, when the child reaches adulthood, it also means they’ll typically have full access to the money, and they can spend it as they choose.
If the child is aware of the funds it can help to teach good habits. It’s a good lesson in the importance of putting money to one side for a clear purpose.
Savings accounts options for children or grandchildren
The earlier you start to save for your children, the more interest they could earn. If you leave the funds until they’re an adult, they’ll also benefit from compound interest. This is when the interest that you earn on your initial investment increases your balance, which over time, increases the amount of interest you earn in the next period. This allows you to really maximise your savings growth.
Opening an account in the child’s name
- Family Tree Trust – This account helps you to save for a child knowing the money is always theirs. Parents and grandparents can open this account. The trustees of the account (the named parents or grandparents) are responsible for operating the account until the child reaches 18.
- Junior ISA (JISA) – This means you can save for a child tax-free, knowing it’s locked away until they turn 18. Parents and young people aged 16+ can open this account. You can add funds to the account when you like. However, there is an investment limit of £9,000 per tax year (2025-26). As with adult ISAs, the main benefit is that any interest earned is tax free.
- Suffolk Young Saver – Children can start to manage their own savings as they grow up. Parents can open the account for young people aged 0-10. Children aged 11-15 can open an account but will need a parent present. Young people aged 16 or older can open the account themselves. This can be a good account for children to put a little pocket money in.
These options are offered by Suffolk Building Society and can be opened in one of our 10 branches or by post.
There are other ways to save for a child under their own name. It can be a good idea to discuss those with a financial adviser.
Opening an account in your name
This means that you have full control. You decide how the money is used. This can be helpful for long-term goals. It also means you have the flexibility to divert the funds to another purpose if needed. Of course, this can also mean it’s tempting to dip into them, which can hurt your long-term savings goals.
The other clear advantage of opening an account for a child in your own name is that it simply opens up the full range of adult savings accounts to you. This means you can consider things like:
- Easy access savings accounts: This means you’ll be able to withdraw money without notice, with accounts often offering either unlimited access or a certain number of withdrawals per year.
- Regular saver: You’ll be able to invest a set amount on a regular basis (usually monthly). This will often mature at the end of a set term and you can then decide whether to withdraw the money or put it into a different type of savings account.
- Fixed rate savings account: The interest rate you get for your savings won’t go up or down for the duration of your savings product. This can give you some certainty.
However, saving for a child under your own name means the account may be less visible to the child. This doesn’t help the child to develop a good savings habit.
If you choose to open a savings account under your own name, keep in mind that any interest earned could count towards your own tax allowance.
Interested in opening an account for your child or grandchild?
We’d love to discuss your options with you.
Call us on 0330 123 0723
Email us on [email protected]
Or book a face-to-face appointment in one of our 10 branches using the link below.
To find out more about this topic head over to our guide on how to start saving for your child’s future, and our guide to saving for grandchildren
