Introducing Kids to Money and Savings

Ben recently celecbrated his fourth birthday and he was a very lucky boy to get money as a gift fromvarious family members. Like most kids these days he has a lot of toys so the need to run out andbuy more really isn't there. He is well aware of what money is and that it buys nice things, heespecially likes it when he gets a red fifty pound note inside a birthday card as his Grandad once told him that these are the good ones worth holding on to, something he has never forgotten. I would now like to expand on his very basic understanding of what money is and introduce him tothe wonderful world of savings and banks and help him to put his money away for a rainy day.

Savings for kids - the options available

So what are Ben's options? Well we could just open a regular savings account for him in one of themany banks or other financial institution or instead add his birthday money into his Child TrustFund (CTF) account but which is better?

If we go down the CTF route, he won't be able to access this money until he is eighteen - is that fairon him? Am I being a good parent locking away his fourth birthday presents until he is eighteen oram I being mean? What if he wants to use the money to buy something before then?

I know when I was a kid I had a regular savings account in which I used to save any left overpocket money along with birthday and Christmas money and after a while use it to buy somethingbigger. I still remember the satisfaction of buying my first racer bike with money I had saved forwhat seemed like a very, very long time. It thought me a valuable lesson, that bike didn't come instantaneously because I wanted it, I had to wait and save hard for it which made me appreciate itthat little bit more.

Maybe the fairest and best option for Ben is to split the money equally and put half away in his CT Fand the rest in a savings account, at least then he will have a little nest egg built up when he turnseighteen but still have some in an account he can access before then.

A Junior ISA for the Twins

This whole savings dilemma got me thinking about the twins and their savings options too, as theCTF vouchers were abolished in 2011, they have missed out on them so maybe we should consider saving with an ISA for them.

Junior ISA's are similar to the CTF, in that they are long term, tax-free savings account for childrenwhere they can save or invest up to £3,720 in per tax year. They then remain tax-free until theireighteenth birthday, and often beyond. At least then when they get money as gifts we can do thesame as we plan on with Ben’s and split it between their Junior ISA's and savings accounts. Do you think that sounds fair? Do you think it is important to introduce kids to the value of moneyand savings from an early age?