What’s the best way to save for my child?
Explore practical ways to save for your child, comparing accounts, Junior ISAs, and other tax-efficient options. Saving for your children early can give them a valuable financial head start in life. Whether it’s helping with education, their first home, or unexpected costs, building savings over time means you can support their future without sudden financial strain.
Key takeaways
Start saving early, even small regular contributions can grow significantly over time
Choose tax-efficient accounts like Junior ISAs to maximise growth and avoid unnecessary tax
Compare options side by side to find the best children’s savings account for your child’s needs
When should I start saving for my child?
It’s never too early to start saving for your child, and the sooner you begin, the more time your money has to grow. Some parents start putting money aside during pregnancy, while others begin once childcare costs settle or when they open a Junior ISA or children’s savings account.
What matters most is consistency. Even small, regular contributions can build into a meaningful sum by the time your child turns 18. Starting early also helps you spread the cost of future expenses – such as education, hobbies, or their first car – without relying on credit or dipping into emergency savings.
How much should I aim to save?
There’s no single ‘right’ amount to save for your child, but a few rules of thumb can help you set a realistic goal. Many parents aim to put aside between £10 and £50 a month, while others choose a percentage of household income or save ad-hoc when they can.
The key is choosing an amount that feels sustainable so saving becomes a long-term habit rather than a strain on your budget.
It also helps to work backwards from future costs – such as university, driving lessons, or a first rental deposit – to get a sense of how much you may want to build over time. Even small, regular contributions can add up significantly thanks to compound interest and investment growth.
Just remember: if you save into accounts designed for children, such as Junior ISAs or some kids’ savings accounts, the money legally belongs to your child. Once it’s paid in, you can’t withdraw or reclaim it, so only commit what you’re comfortable setting aside.
What are the different ways to save for my child?
Saving for your child can feel overwhelming, but the good news is there are plenty of options to suit different budgets, goals and timeframes.
Whether you want easy access to the money or a long-term tax-efficient pot they can use as an adult, here are the main ways to save – each with its own benefits and drawbacks.
Children’s savings accounts
Children’s savings accounts work much like standard savings accounts but are designed for under-18s, often offering higher interest rates. They’re ideal if you want a simple, flexible way to build a pot for your child over time.
Pro - Easy to open and manage, with good interest rates and no limits on how much you can save.
Con - Tax usually isn’t paid on a child’s savings because it counts as their own income, but if a parent gifts the money and it earns more than £100 interest in a year, that interest may be taxed as the parent’s.
Junior cash ISA (JISA)
A Junior Cash ISA lets you save tax-free for your child until they turn 18, with a yearly allowance set by the government. Money is locked away until their 18th birthday, making it a strong long-term savings tool. Anyone can pay money into a Junior ISA, but the total amount paid in cannot go over £9,000 in the 2025 to 2026 tax year.
Pro - All interest earned is completely tax-free, making returns more valuable over time.
Con - You can’t withdraw the money early, and your child gets full control of the money at 18.
Junior stocks and shares ISA
A Junior Stocks and Shares ISA allows you to invest on behalf of your child, giving the money the chance to grow more than cash over the long term. It’s suitable if you’re comfortable with investment risk and saving for at least five years.
Pro - Potential for higher long-term returns than cash savings, with tax-free growth.
Con - Investments can fall as well as rise, so you may get back less than you paid in.
Premium bonds (via a junior account)
Premium bonds for children are held in the child’s name but managed by a parent or guardian. Instead of earning interest, your child’s savings are entered into monthly prize draws with tax-free prizes.
Pro - Zero risk to your initial savings, with the chance of winning up to £1million tax-free.
Con - There’s no guaranteed return, so your child’s savings may not grow at all.
Regular saver accounts for kids
Regular saver accounts offer higher interest rates if you commit to saving a set amount each month. They’re great if you want to build a discipline of consistent saving.
Pro - Often some of the highest interest rates available for children’s savings.
Con - Monthly deposit limits apply, and missed payments may reduce the interest rate.
Trust funds or bare trusts
Bare trusts allow you to hold money or assets for your child until they turn 18, with very few limits on how the money can be invested. They offer flexibility and can be set up at any time.
Pro - You can choose investments or cash, and the money legally belongs to your child for tax purposes.
Con - Your child gains full access at 18, regardless of maturity or circumstances.
Child pension (Junior SIPP)
A Junior Self-Invested Personal Pension (SIPP) is a long-term investment account for a child’s retirement, with contributions boosted by government pension tax relief. While they won’t be able to access it for decades, it can grow significantly over their lifetime.
Pro - Contributions benefit from tax relief, giving an instant uplift on anything you pay in.
Con - Savings are locked away until the child reaches pension access age, currently 55 and set to rise to 57 from 6 April 2028.
Child Trust Funds (CTFs) – for eligible children
Child Trust Funds were offered to children born between 2002 and 2011, and many remain active today. If your child has one, you can still top it up or consider transferring it to a Junior ISA for better returns.
Pro - Many accounts can be transferred to higher-interest JISAs, boosting potential growth.
Con - Not available to children born outside the original eligibility window.
High-interest current accounts (for teens)
Some banks offer high-interest youth current accounts for teenagers, designed to help them manage pocket money and savings. While not a long-term investment, they’re useful for introducing money skills.
Pro - Encourages good budgeting habits with accessible savings features.
Con - Interest rates often drop after a certain balance, limiting growth.
Investment funds or ETFs (held in a trust)
You can invest in funds or ETFs on your child’s behalf by placing them in a trust or your own investment account earmarked for them. This provides flexibility and potentially strong long-term growth.
Pro - Wide choice of investments and potential for competitive long-term returns.
Con - Investments carry risk, and tax rules can be more complex.
What are the tax implications of saving for a child?
The tax implications of saving for a child in the UK depend on the type of account you choose and who provides the money.
Children have the same personal tax allowances as adults, meaning they can earn interest or investment returns up to the annual Personal Allowance and Personal Savings Allowance before paying tax. In practice, most children won’t earn enough to exceed these limits.
However, there’s an important rule for parents: if a parent gives money to their child and the interest earned from that gift exceeds £100 a year, the whole amount is taxed as the parent’s income. This rule doesn’t apply to money given by grandparents or other family members.
Junior ISAs remove this issue entirely, as all interest and investment gains are tax-free, regardless of who contributes. Child trust funds also offer tax-free returns.
Premium Bonds for children also avoid income tax, as returns come in the form of tax-free prizes rather than interest.
Overall, saving for a child is generally tax-efficient, but parents using standard children’s savings accounts should be aware of the £100 rule and consider tax-free options if they plan to save larger amounts.
What happens to savings accounts when my child turns 18?
When your child turns 18, most children’s savings accounts automatically convert into standard adult savings accounts. The money becomes fully theirs to control, meaning they can withdraw, spend, or reinvest it as they choose. You’ll no longer have authority over how the money is managed, even if you contributed all the funds.
If they hold a Junior ISA, it also transitions into an adult ISA at 18, keeping its tax-free status. Your child can then continue saving or investing in it under adult ISA rules, or withdraw some or all of the money if they prefer.
For Child Trust Funds, your child gains access on their 18th birthday and can choose to cash it in or transfer it into an adult ISA to keep the tax benefits.
Most banks will contact you or your child ahead of their 18th birthday to explain what will happen and outline their options.
How can I best teach my child about money?
Teaching your child about money from an early age helps build lifelong financial skills.
Start with simple concepts like saving pocket money, understanding spending choices, and setting short-term goals.
As they get older, introduce ideas such as budgeting, comparing prices, and understanding interest or investment basics.
Practical experience is key: consider letting them manage a small bank account, contribute to savings, or use digital tools like child-friendly apps that simulate real-world spending.
Games, quizzes, and everyday discussions about money can also make learning engaging and relevant.
Trusted UK resources for more information include:
MoneyHelper. Offers age-specific guides on saving and budgeting
Young Money. Provides lessons, activities, and tips for schools and parents
NS&I Kids. Explains saving in a child-friendly way and shows government-backed options.
Compare children’s savings accounts with MoneySuperMarket
Comparing children’s savings accounts with MoneySuperMarket makes it quick and simple to find the right option for your child. You can view accounts from a wide range of UK providers in one place, showing the key features that matter most at a glance.
You can see interest rates, minimum and maximum deposit limits, access rules, and any special incentives or bonuses. Filters allow you to narrow down results by account type, such as Junior ISAs, regular savers, or standard children’s savings accounts. This makes it easy to focus on accounts that fit your budget and savings goals.
Once you’ve found the accounts that suit your needs, you can compare them side by side, highlighting differences in interest, flexibility, and tax benefits. When you’re ready, click through to the provider to open an account and start saving for your child quickly and safely.
Author
Tim Heming
Personal Finance Expert
Tim Heming is a journalist and editor who has written about personal finance for national newspapers and consumer websites for 15 years. Tim enjoys providing no-nonsense information to help consumers...
Reviewer
Alan Cairns
Senior Content Editor
Alan helps MoneySuperMarket break down complicated financial topics into plain English, to help you find the right deals. When he’s not writing or editing you might find him cycling the South Downs.