MARTIN Lewis has explained the best way for new parents to save up thousands for their kids.
The money saving guru revealed how parents could make their cash go further for their children on This Morning.
He gave his top tips to a new mum phoning into the show asking whether she should put money in a savings account, Junior ISA or Premium Bonds account .
She said she wanted to save around £100 a month for her two-week old son to set him up for when he’s older.
Martin broke down the pros and cons of each money saving method the viewer listed.
He ultimately recommended putting cash into a children's regular savings account.
Unlike the "pitiful" interest rates banks offer on most savings accounts to adults, rates on children's savings accounts are "not too bad", Martin said.
If you put your money into either the Halifax or Barclays children's regular saver accounts, you could earn 3.5% interest on top of what you put in for a year, he said.
You can put a maximum of £100 and a minimum of £10 per month into these accounts.
If you put £100 into one of these accounts per month, you'll end up with up to £1,223 by the end of the year.
Hargreaves Lansdown personal finance analyst Sarah Coles said this works out at roughly an extra £23.
However, you'll have to renew your child's saver account after every year, Martin said.
Money saving tips for parents
WE’VE put together six top tips to cut costs, nab freebies and to make sure you’re not fined.
- Free prescriptions and dental care – Prescriptions cost £9.15 a pop in England, while NHS dental costs vary by location. You can get both for free while you’re pregnant and for 12 months after your baby’s due date. Ask your doctor or midwife for a maternity exemption certificate (MATEX) to claim the free care.
- Free milk, infant formula, vitamins or fruit and veg – Under the Healthy Start programme, you may be entitled to the freebies if you’re at least 10 weeks pregnant or you have a child under four and you’re on certain benefits, such as Universal Credit.
- £500 free grant – In England, Northern Ireland and Wales you may be entitled to a Sure Start grant of £500 if you’re on certain benefits and expecting your first child or expecting more than one baby – such as twins.To claim, you need to fill out the following form on Gov.uk and get your doctor or midwife to sign it.
- Register the birth in time or face a £200 fine – You need to register the birth within 42 days of your baby being born with your local registry office. This costs £11 in England and Wales.
- Update a will or update it – If you don’t have a will, in England, Northern Ireland and Scotland, where one parent dies, children will only inherit cash if the estate is worth more than £250,000 – otherwise all the money will go to the surviving spouse. If you don’t want that to happen, you need to get a will stating your wishes.
- Consider getting life insurance – No-one likes to think about death but if something happened to you, could the family survive without your salary? If not, you many want to consider life insurance. Use a comparison service to find not only the cheapest, but the most suitable cover for your needs.
He also gave examples of some banks with the best Junior ISA account interest rates.
A Junior ISA is a tax-free savings account for under 18s where you can save up £9,000 a year.
Martin said Darlington Building Society offers 2.5% interest rates on its Junior ISA accounts.
We also spotted that Bath Building Society offers the same rate too.
Martin said that while many parents set up a premium bonds account to put aside cash for their kids, it might not be the best savings method.
This is because it's unlikely that you'll win a big sum.
He recommended it's best to put your money into a children's saver account instead.
"Even if you have £1,000 in premium bonds over a year, with typical luck you're likely to win nothing, whereas children can get up to 3.5% interest in the top savings accounts," he said.
"I'd be looking at putting it in the top savings accounts, Halifax or Barclays regular savers accounts, up to £100 a month."
However, Hargreaves Lansdown’s Sarah Coles told The Sun that it could be best choose a Junior ISA if you're planning to save over a longer period of time.
"The cash versions of these are tax-free, and because they are tied up until the child is 18, it removes the temptation to dip in as you go along," she said.
"If you're holding it up to 18 years, a stocks and shares Junior ISA will rise and fall over the short term, but have tended to grow much faster than cash over the long term.
"Investment won't suit everyone, but if you're putting money away for a child for five to 10 years or more, it needs to be part of the discussion."
Not everyone has £100 spare to save, though.
The Sun has previously revealed how saving just £25 into a Junior cash ISA could set your child up with almost £11,000 when they turn 18.
But if you're looking to save a bigger windfall than this for your little one, then you could end up with £18,000 by the time they're 18 if you save £1.67 a day.
If you stash this amount into an investment account and leave it alone it’ll be worth £18,000 in 18 years’ time, according to The Share Centre.
Most read in Money
Martin Lewis also explained how unpaid carers can claim £1,000s towards their pension on the This Morning show.
He also has explained how to get FREE food and drink using cashback sites and coupons.
Plus, he’s explained how anyone aged 18-39 can get £1,000 a year free towards buying a home .
Martin Lewis explains how unpaid carers can claim £1,000s towards their pension
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