With National Children’s Day 2025 having recently taken place, we’re looking to the future in this month’s article, as Greg Potter, Head of Member Experience at Leeds Credit Union, explains everything you need to know about the benefits of setting up savings accounts for your little ones.
The benefits of children’s savings accounts
Saving for a child means that when they become an adult, they will have money of their own which they can use for whatever they want, giving them independence and reducing the financial pressure they will face tomorrow.
Obviously the amount you choose – and are able – to save is important but it’s not the be-all-and-end-all many people believe.
For example, one person saving just one pound a week from when a child is born until it turns 18 will earn £936. If both parents contribute to the account and each saves £2 per week, suddenly the total rises to a not-insignificant £3,744.
The easiest way to save larger sums for your child’s future is with a junior ISA (individual savings account) which allows you to save up to a certain amount each year.
How do junior ISAs work?
Available from many credit unions, banks and building societies, Junior ISAs are long-term, tax-free savings accounts for children that are opened by their parents or guardians.
Although the parents or guardians manage the account, the money belongs to the child, who can take control of the account once they turn 16 but can’t withdraw any money until they’re 18.
Once an account has been set up in a child’s name, anyone can pay money into it but the total amount paid in cannot exceed a certain limit.
If your aim is to save money for your child and then gift them the amount you’ve saved once they reach a certain age, a junior ISA is the way to go.
How do Young Savers accounts work?
Some people want to educate their children about the role money will play in their life as soon as possible. If that’s the case, it could be worth opening a Young Saver account instead of – or as well as – an ISA.
The main difference between a Young Saver account and an ISA is that children can access their Young Saver account much earlier (usually once they turn seven), meaning they can pay money in and withdraw it.
This approach allows you to teach your kids about the value of money and the importance of saving from a young age in a hands-on fashion which is more effective than simply trying to explain to them what banks do.
It also encourages them to put what they learn into action and begin saving for their future at an early age. By helping them get into healthy financial habits now, you’ll increase your child’s chances of having a more financially stable future.
Leeds Credit Union provides affordable financial services to people in Leeds
Photo: Shutterstock
While you’re here, can we ask a favour?
South Leeds Life is published by a not-for-profit social enterprise. We keep our costs as low as possible but we’ve been hit by increases in the print costs for our monthly newspaper which have doubled in the last two years.
Could you help support local community news by making a one off donation, or even better taking out a supporters subscription?
Donate here, or sign up for a subscription at bit.ly/SLLsubscribe
