How to build a nest egg for your child

You can save for your child, whatever your budget. Our financial expert explains how

Published 06 October 2008

Setting aside money to help your child have a good start in adult life is possible, no matter what your income. Financial expert Martin Bamford has these simple tips to get you started.

Martin Bamford

Chartered financial planner and dad of one

How to save for your child

Small amounts make a big difference
If you put away just £2 a month for 18 years you could build a nest egg of £873 (assuming an average yearly return of seven per cent on your investments). If you saved £10 a month you’d get £4,365 — money that could go towards your child’s first car or college fees!
Shop around
Ask your bank to help you save more, for example, with a higher interest regular savings account. You can compare interest rates on price comparison websites like www.moneysupermarket.com
Look after the pennies
Why not put a few coppers from your purse into a jar each week and take it to the bank when it’s full? Or sell old toys and clothes at car boot sales or on eBay and put the profits in a savings account.
Invest your Child Trust Fund voucher
Every child born on or after 1 September 2002, living in the UK and receiving child benefit, gets a £250 voucher to start their Child Trust Fund (CTF), and then a further £250 at age seven. Low-income families receive £500 on both occasions. You can decide where to invest the voucher, or after 12 months the Government will invest it for you, as the voucher is only valid for one year.
Top up your child’s Child Trust Fund
This is one of the best ways to save for your child as it’s tax free. You and your relatives can put up to £1,200 a year into it. Using the CTF calculator we worked out that if you save the maximum each year, your child could end up with a nest egg of £24,449* when she turns 18.
Ask for help
For birthdays, suggest friends and relatives give your child cash rather than toys and pay it into a savings account or her CTF.
Involve your child
Tell her how much you are putting aside for her future and explain the importance of saving.

Find out more

Child Trust Fund
www.childtrustfund.gov.uk
0845 302 1470
Contact a Family (can arrange free trust fund advice for families with disabled children)
www.cafamily.org.uk
0808 808 3555

Picture: Getty

*Figure based on a household with an income of £14,495 or less and a child born on 1 August, 2008 with a share-based CTF that has £1,200 added each year until they are 18.

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