Money Saving Ideas for Children: The Best Ways to Save for Your Child in the UK
Published 27th of January 2012·Updated 2 April 2026
Reviewed by: Reviewed for accuracy April 2026
The best way to save money for a child in the UK is to open a Junior ISA (JISA), which allows you to save up to £9,000 per year (2025/26 tax year) completely free of tax. The money is locked away until the child turns 18, making it an ideal long-term savings vehicle. For shorter-term goals, a children's instant-access savings account offers flexibility.
Short Summary
A Junior ISA is the most tax-efficient savings account available for children. You can choose a cash JISA or a stocks-and-shares JISA; the latter has historically produced better returns over 10-plus years, though investment values can fall as well as rise.
Starting early makes an enormous difference thanks to compound growth. Saving £50 a month from birth in a stocks-and-shares JISA at an average 5% annual return could grow to over £17,000 by the time your child turns 18.
Children's savings accounts from banks and building societies are useful for shorter-term goals and for teaching children about saving. Rates vary significantly, so it is worth comparing before opening one.
For families who want to invest more ambitiously for their child's future, investment funds and Junior SIPPs (pension accounts) are worth exploring, though these carry more risk and are better suited to longer time horizons.
What is a Junior ISA and how does it work?
A Junior ISA (JISA) is a tax-free savings account for children under 18, available to UK residents. Parents or guardians open the account and manage it until the child turns 16, at which point the child can manage it themselves (though they cannot withdraw the money until they turn 18). The annual subscription limit is £9,000 for the 2025/26 tax year.
There are two types: a cash Junior ISA, which pays a fixed or variable interest rate with no investment risk, and a stocks-and-shares Junior ISA, which invests the money in funds or shares. Over an 18-year period, stocks-and-shares JISAs have historically outperformed cash JISAs, but investment values can go down as well as up.
Providers including Hargreaves Lansdown, Vanguard, and Fidelity offer stocks-and-shares JISAs. Most high-street banks including Halifax, Barclays, and Nationwide offer cash JISAs. You can transfer between providers but a child can only hold one of each type at any time.
What are the best children's savings accounts in the UK?
High-street banks and building societies all offer children's savings accounts. These are useful for building a savings habit with younger children and for money you may need access to before the child turns 18. Interest rates vary considerably, so it pays to compare before opening.
| Account type | Access | Best for |
|---|---|---|
| Instant access | Immediate | Short-term goals, teaching saving |
| Notice account | 30-90 days notice | Medium-term savings |
| Regular savings | Monthly deposits | Building a habit |
| Junior ISA | Locked until age 18 | Long-term, tax-free growth |
The Money Saving Expert website maintains a regularly updated comparison table of the best-paying children's savings accounts in the UK. At the time of writing, several building societies offer rates above 4% on easy-access children's accounts, which is competitive relative to adult accounts.
What is a Child Trust Fund and can I still use one?
Child Trust Funds (CTFs) were government-backed savings accounts issued to children born between 1 September 2002 and 2 January 2011. The government contributed £50 to £500 at birth, depending on family income. New CTFs are no longer available; the scheme was replaced by the Junior ISA in 2011.
If your child was born in this window, their CTF still exists and continues to grow. You can transfer the funds into a Junior ISA at any point, which may offer better rates or investment options. Use the HMRC online tool to track down a lost CTF if you are unsure where the account is held.
Are investment funds a good option for saving for a child?
Investment funds, held within a stocks-and-shares Junior ISA or a general investment account, are worth considering for parents with a long time horizon of ten or more years. Diversified low-cost index funds, such as those tracking the FTSE All-World index offered by providers like Vanguard, have historically delivered average annual returns of around 6-8% over long periods, though past performance does not guarantee future results.
For amounts outside the Junior ISA allowance, investments held in a parent's name are subject to income and capital gains tax in the parent's hands. A financial adviser can help structure this efficiently. The Financial Conduct Authority's register at fca.org.uk lets you check that any adviser you use is authorised.
How do I teach my child to save money?
Children develop financial habits early. Research published by Cambridge University found that financial habits begin forming as young as age seven. Practical steps that work include: giving pocket money in cash so children can physically see and count their money, using a clear jar or money box so they can watch savings grow, setting short-term savings goals for something they want, and involving older children in age-appropriate household budget conversations.
Many banks offer children's current accounts from age 11 (Nationwide FlexOne, Barclays Under 19s Account, Starling's connected card for children), which introduce children to cashless spending with built-in parental controls and spending notifications.
Frequently Asked Questions
How much can I put into a Junior ISA each year?
The Junior ISA annual subscription limit is £9,000 for the 2025/26 tax year. This can be split between a cash JISA and a stocks-and-shares JISA, but the combined total cannot exceed £9,000. Contributions can come from anyone, including grandparents, though the total across all contributors still cannot exceed the annual limit.
Can I open a Junior ISA for a grandchild?
Grandparents can contribute to a grandchild's Junior ISA, but they cannot open one themselves. Only a parent or legal guardian can open the account. Once the account is open, grandparents can pay money in directly and there is no gift tax in the UK, so there is no tax implication for the grandparent in most cases.
What happens to a Junior ISA when the child turns 18?
At 18, the Junior ISA automatically converts to an adult ISA. The child then has full control of the account and can withdraw the money, keep it invested, or transfer it to a different provider. There is no tax to pay on any withdrawals.
Is it better to save in cash or invest in a stocks-and-shares Junior ISA?
For time horizons of ten or more years, stocks-and-shares JISAs have historically outperformed cash savings significantly. For shorter time horizons or where you cannot afford any risk of the value falling, a cash JISA is safer. Many parents choose to split contributions between both types.
Can I save for my child if I have debt?
You can do both, but high-interest debt should usually take priority. If you are paying 24% APR on a credit card, the guaranteed return on clearing that debt exceeds what most savings accounts or investments will reliably deliver. Once high-interest debt is cleared, even small regular contributions to a Junior ISA or children's savings account are worthwhile. If you are unsure how to balance this, StepChange on 0800 138 1111 or Citizens Advice can provide free debt guidance.