A finance expert has shed light on a few ways to save up for your children – from investing as toddlers to sibling competitions for cash bonuses.
With the current cost of living crisis, families up and down the country are struggling due to rising expenses (be it bills, food or petrol) – with many focused on providing stability for their children.
However, with interest rates on the rise, and further increases planned across many aspects of daily life, parents are finding themselves dipping into savings, rather than adding to them.
Laura Suter, the head of personal finance at AJ Bell – who is also a 36-year-old mother herself – has shared top tips to help save a small fortune for your little ones.
She claims ‘thousands’ could be saved through simple tricks while preparing a stable future for your kids, too.
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Educate your kids about investment
Laura wants children to not only be involved with their own money from a young age, but to ensure they understand the meaning behind it, too.
It’s important to get them involved – from explaining why to put money away to how this adds up over time.
She suggests ‘investing in a company they understand,’ such as Disney.
‘You can then explain how buying shares in a company can help you grow and benefit as the company does well,’ she says.
‘If you’re investing money, then it’s a really good idea to get them involved in the process.’
Dip into sibling rivalry
Laura advises making a game out of saving money and having the kids compete for prizes or a ‘bonus,’ as she calls it.
‘Once children are old enough to start learning about money, they can get involved in saving too,’ she says.
You can demonstrate this by teaching how to save up for a particular toy, or showing how their previous birthday money has grown over time.
If you can, Laura says you can even offer a matching system – where you match the amount they’ve saved or add a percentage to it.
‘This will give them the incentive not to splurge their money as soon as they get it,’ she explains.
‘Another option if you have more than one child, is to have savings competitions – see which sibling can save the most money in a month, with a bonus for the winner.’
Open a savings account
Even if it’s a little amount of money each month, saving up for your children from birth onwards can really add up.
If you only put away £20 a month, investing with a 5% return could total up to more than £7,000 by the time they’re 18, according to the finance expert.
You could even top this up on special occasions, or ask family to contribute towards the savings instead of buying toys and presents.
Think about pocket money
A timeless question – how much pocket money is the right amount?
‘It can be quite tricky to work out how much to give for pocket money, as it really varies by age,’ says Laura.
According to the personal finance expert, on average, four to six year olds get £4 a week while this goes up to £12 for 14 year olds.
But, it goes without saying, that this very much depends on what a family can afford.
‘For younger children, they may want a visual chart of how much they have in their piggy bank,’ says Laura.
‘This will give them a regular reminder of how much they have stashed away and get them excited about saving pennies.’
Teach about value for money
Another tip is to teach your children the value of money by giving them tasks to ‘boost’ their earnings.
Try to encourage older children to value money by letting them earn, in their own way.
‘This could be from setting up a lemonade stand, doing a bake sale, selling old toys or looking after the neighbour’s cat while they’re away,’ says Laura.
‘This can help them to understand the value of earning money and how to keep this ticking over.’
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