Whether there’s a financial milestone in mind or not, setting some savings aside for a youngster’s future may be something relatives hope to do. However, with day to day living costs to consider, it’s not always easy to put into practice.
Among his suggestions is the technique of setting aside small but regular amounts – known as micro-saving.
“Not everybody is able to set aside large chunks of their income for their children, especially when there are multiple children to save for,” Mr Mountford said.
“However, if you intend to gift your child something when they turn 18 or 21, if you break it down month-by-month there’s a lot of potential to save.”
The savings expert went on to suggest a way in which savers could find themselves with hundreds of pounds sitting in an account each year.
And, while the end result may be substantial, the challenge he suggested begins with just one pence.
“Using micro-saving techniques, you could start with the 365-day money challenge, where you start by saving 1p on January 1incrementing to saving £3.65 on December 31,” he said.
“By saving this small amount of money every day, you would save around £670 a year, and by the time your child is 18 – over £12,000, which be a fantastic starting point.”
Another tip shared by Mr Mountford focuses on interest rates.
“Whilst the current economic climate may be uncertain, selecting the highest interest or a fixed-rate bond to put money away for your kids may be a sensible option,” he said.
“If you only intend to add money into the account and not withdraw until your child reaches a certain age, selecting a fixed-rate option would mean your money doesn’t fluctuate with changes to prevailing interest rates.”
Others may be interested in investing the money, however it’s important to be aware that this comes with risks.
“Whilst traditionally investing in stocks and shares meant high risk, high reward – it’s still a potential way to turn a small sum into a healthy amount for your child when they approach adulthood,” Mr Mountford commented.
“If you’re looking for a guaranteed way to create a nest egg for your child in the future, this may not be the safest option – look at putting your money into a fixed-rate, high-interest account instead.”
Savings accounts and interest rates are something which Finance Expert at Moneyfacts.co.uk Rachel Springall shared insight on this week.
Recent analysis by Moneyfacts has found £228 could currently be earned over one-year in the top easy access account versus the lowest.
“Those who do have some savings to one side may be disappointed to see interest rates have fallen to record lows and may decide that convenience with their cash is key right now,” Ms Springall said.
“Savers may have their cash stored in an easy access account with a familiar brand, such as a high street bank, and just by switching they could earn over £200 a year from the worst rate to the best in the market.”