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How to help your child grow a savings habit in 2023 and beyond
How to help children start a savings habit (Alamy/PA)
It’s never too early to teach kids about saving money. By Vicky Shaw.
Whether you’re helping them put aside a bit of their own pocket money, or putting some funds away for the longer term, supporting your child in starting a savings habit in 2023 could reap big rewards.
“Getting children into the savings habit at a young age is a wise move to teach them the value of money,” says Rachel Springall, a finance expert at Money Facts.
“There are a variety of pocket money apps out there, which may it easy to keep track of and demonstrate the importance of saving money for a rainy day.”
Children can even use spending cards which have had money pre-loaded onto them and are linked to pocket money apps, helping them gain an understanding of saving and budgeting from an early age. Parents should make sure they are aware of any fees involved, however.
Depending on the child’s age, they may also be able to have their own bank card, which could help them to feel more responsible for their own spending and saving decisions.
NatWest and HSBC UK, for example, offer accounts where children can use a contactless debit card from the age of 11. Children using these cards cannot go into debt on them. Cards are optional and it is up to parents whether or not their child has one. NatWest also offers the Rooster Money app, which has parental controls.
For very young children, a good old-fashioned piggy bank or jar will help them see their savings grow. But bear in mind they obviously won’t be earning interest while cash is sitting at home – which may be particularly problematic during the current period of high inflation, where larger sums are involved.
If you’re building a longer-term nest egg for your child for when they reach adulthood, a Junior Isa, or Jisa, could be a good option. Up to £9,000 can be placed into a Jisa in the 2022/23 tax year.
Money can be held in cash in a Jisa, or you could invest in a stocks and shares Jisa – which does carry the risk of the value of the savings pot going down as well as up, but may mean the pot grows bigger over the longer term.
Springall also cautions that if savings are held outside a Jisa, it may be more tempting to dip into the pot. “A Jisa removes that option. Junior Isas mature into an adult Isa when the child turns 18,” she says.
Even if parents are only putting small amounts away to help their children save, experts say they should not be put off.
“The sooner you start saving the better,” says Youssef Darwich, co-founder and CEO of family investment app Nosso.
“Don’t assume you have to lock your money away,” Darwich adds, noting that if you think the money will be needed again soon, “you should consider an easy access savings account.”
Another way to help your child’s savings grow could be to see if other family members would like to occasionally chip in, Darwich suggests. That way, your child can hopefully build up a savings pot faster and benefit from the interest earned on the contributions.