Simple Ways To Give Them A Head Start
Throughout our lives there will inevitably be children who end up playing a big part, whether they’re our own, close friends becoming parents, or new arrivals in the family. It’s always a lovely time and something most of us genuinely enjoy sharing with the people closest to us. But when birthday season rolls around, the question becomes: what do you actually get them? Another toy? More clothes?
How about financial security instead?
Because the truth is, when a child has decades before they’ll need access to any meaningful amount of money, you’ve got an opportunity most adults would kill for – time. And time means compounding. So if you want to give them something that genuinely makes a difference later on, here are a few options worth considering.
Junior ISA (JISA)
A Junior ISA is opened in the child’s name, and once it’s set up, anyone can contribute – parents, grandparents, aunties, uncles, friends. Once the money goes in, it legally belongs to the child, which is actually a good thing… it stops parents dipping into it “just for a minute”. They get control of the account at 16 but can’t withdraw any money until 18.
You can choose either a cash JISA or a stocks & shares JISA, and both protect any growth or interest from tax, which is brilliant. For most people, a cash JISA is a simple, safe place to start – and there are some solid interest rates around at the moment. But if you’re thinking long-term (and with kids, you usually are) then a stocks & shares JISA can offer higher potential returns, especially if you stick to broad, safer ETFs over a couple of decades.
Most of the big brokers offer JISAs, including our favourite, Hargreaves Lansdown. And the contribution limit this tax year is £9,000.
Normal Savings Accounts
This is the most straightforward option – a standard savings account opened in the child’s name. You can choose an instant-access account or go for something with a fixed term or regular saver if you want a better rate.
These accounts can be brilliant for teaching kids about money. Letting them see their balance grow (even if it’s only small amounts at first) helps them understand that money is a tool and that saving doesn’t have to be boring. When they’re old enough, you can show them statements, interest, and how small decisions build up over time.
Using Your Own Accounts
Another option is to keep the money in your own ISA or savings account, but earmark it for the child. This gives you full flexibility – you can move the money, change investments, or use it earlier if something genuinely important comes up for them.
Friends and family can still send money your way to add to the pot, but obviously this approach relies on trust, because you have full access to the funds. For some people it’s a perfect setup, especially if you want more control than a JISA offers.
Children’s Pension
A less obvious option, but one that can make a ridiculous difference over time, is a children’s pension. A parent or legal guardian can open one, and it automatically transfers to the child at 18.
It’s extremely tax-efficient, and you can contribute up to £2,880 a year (with the government topping it up to £3,600). The catch is that the child won’t be touching this money for many, many years – but that’s the point. With that amount of time to grow and compound, it could genuinely change their retirement prospects before they’ve even had their first job.
The Basics (And Arguably The Most Important Bit)
Beyond accounts and investment vehicles, don’t forget the basics. Giving kids pocket money or paying them for completing chores is a brilliant early lesson in how money works. It shows them that money is earned, not just handed over, and that they can use it as a tool to improve their lives.
Talking openly about money – interest, growth, tax, saving, spending – gives them a head start that most adults never had. If you can help them build a solid understanding early on, you’re not just giving them cash… you’re giving them the confidence and clarity to handle money well as adults. And that alone can lead to a far more secure, anxiety-free future.
