Researchers can demonstrate that bringing up a child costs anything from £30,000 to several hundred thousand pounds. That simply reflects the fact that most parents spend a significant fraction of their income on their children and the more income they have, the more they spend.
Regardless of how much you spend over the years, I strongly suggest that you think like this: diverting a small fraction of that spending into savings for your children will make a huge difference to their future.
Now that we all aim to live into our nineties, most of our children won't inherit a bean until they're collecting their own old age pensions, so to give them a financial kick-start in life you have to do it by saving. The good news is that over a period as long as 15 or 20 years, even small monthly sums are going to build up to very worthwhile chunks of capital.
So don't put off doing it because the amount you save will be so small that 'it won't make a difference'. Even a tenner a month will make a difference, and if you follow my rules, you can be reasonably confident your children will start adult life with the confidence that comes form having a healthy wedge behind them.
Start saving now
The right time to start saving for your child is now. Don't wait. Ideally, start the day they're born, but just get started.
The first savings step for any child today is through the Child Trust Fund (CTF), which gets a small government bung, tax-free status, and a payout at 18 with the option to roll the capital over into a tax-free ISA, in which case it can stay invested tax-free for as long as they like.
You can contribute up to £1,200 a year or £100 per month in the CTF. The full £100 per month would, assuming a not-too-ambitious 7% annual return, pile up capital of £43,000 by the child's 18th birthday.
Use our best-buy CTF from Foreign & Colonial - it has lower charges than almost all its rivals plus investment in a huge, well-spread international fund of shares. History suggests it will pay out two to three times as much as a cash-based CTF at age 18.
For children not eligible for the CTF, look at Foreign & Colonial children's plan, which is almost identical to its CTF.
Enlist the relatives
Get to work on all your relatives, especially grandparents. Ask them to focus on the child's future rather than the present. Brief them to give smaller-value birthday and Xmas gifts and to accompany these with a money gift to go into a savings scheme.
Sign the grandparents up to regular contributions to the CTF. Make sure your child understands what's happening and, once they're of an age, expresses their thanks.
Go for top interest
The CTF is locked away till age 18, so every child also needs a cash kitty. See our list of the best children's accounts. Forget the gimmicks - what's most important is the rate of interest. Today, under 5% isn't good enough.
Give them an incentive
Teenagers can easily get into spending, but if you give them the right incentives they can also get into saving. For a period of, say, three months, offer to match every £1 they save with £1 of yours in their savings account - provided it stays there for a specified time period after that. Or run this incentive programme whenever they have a big, but not impossible, financial target to meet in order to get or do something they really want.
Use the Halifax Child Regular Saver account to earn a whacking 10% interest.
Get them involved
Use savings schemes to help your children's money education. The CTF is especially good because our Best Buy plans all offer a choice of investments and the child can get involved in deciding where the money should go.
There's nothing quite like the confidence you derive from a healthy bank balance. Follow these steps and your child will start adult life with that kind of confidence.
