How can I save for the future of my child?

For a parent, knowing that your child has a financially secure future is bound to be one of your top priorities, which is why many like to begin saving for their child as soon as possible.

Building a savings pot for a child's future can help towards paying for university fees or building a fund to get them on the property ladder. It’s so simple to start saving for a child and all it takes is setting a small deposit to one side each month. To make the most of the tax-free options available, you also need to be aware of any personal allowances when starting up a savings pot for your children.

But just how can you save for your children's future? We look at a few options.

Children's savings accounts may be your most obvious starting point, with parents able to open an account for their child and pay into it whenever they like. The best part is that, when the child is old enough, they can start paying in and see their savings pot grow, giving them hands-on experience of managing their own money from an early age. They can also learn about the benefits of compounding, whereby interest is earnt on interest already accumulated as well as on the original savings balance, allowing pots to snowball.

The good news is that children’s savings accounts tend to pay far more than adult savings accounts!

For many, an easy access deal will be the most appropriate, as it's this type of account that allows you to add to the pot and withdraw funds as necessary (such as if your child is saving up their pocket money for a special treat). However, many parents will want to use the savings account as a chance to build up a pot for the long term, in which case a less accessible savings vehicle may be the better option.

Opening a Junior ISA (JISA) could be a great option for those who want to benefit from complete tax-efficiency, as well as having the peace of mind that the funds cannot be accessed until the child turns 18. There is an annual limit which can be paid in which is £9,000 for the tax year 2024/25.

It could be particularly suitable for higher earners who may want to save substantial sums for their child or for those who have long-term goals in mind. If interest of more than £100 is earnt on any savings that were paid in by the child's parent or legal guardian that is held outside of this tax-free wrapper, it will be taxed as if it belonged to the parent or guardian.

While there are plenty of cash JISAs available, it's worth noting that it's possible to have a stocks and shares JISA too, which may be suitable for those who don't mind taking a bit more risk for the potential of a better rate. Just remember that there's no guarantee, and if your chosen funds don't perform well, you may end up with less than you put in.

A bit of a curve-ball, but worth mentioning nonetheless – if you're thinking long term and want to ensure your child can retire in comfort, there's nothing stopping you from paying into a pension for them. Relatives can save up to £2,880 a year into a pension for a child, and this will be topped up with Government tax relief to total £3,600. You can pay in more than this, but it won’t benefit from the Government tax relief top up.

If this kind of deposit is continued, it could add up to a significant pot by the time the child hits retirement age.

Premium Bonds are a popular gift for children, and the rules have recently been relaxed to allow relatives and friends (other than parents and guardians) to buy bonds for children they know. There may not be guaranteed returns, but for many, Premium Bonds can be a great way to give children the chance to win tax-free prizes, and can be a fun gift idea for Christmas, too.

See our guide on Premium Bonds vs savings accounts.

As you can see, there are plenty of ways you can start savings for your child, but above all, it's important to start early – saving even small sums can easily add up over the years, and if you save from your child's birth until they turn 18, you could build a substantial pot for them to use in later life.