Building Financial Confidence from Childhood
When children learn to manage money early, they gain more than a savings habit — they gain confidence. Guiding them to save, invest, and plan for the future can help them make thoughtful choices as adults. The earlier that journey begins, the more powerful the results.
Save Some, Spend Some
Children naturally understand instant rewards — a new toy, a treat, or a day out. The harder lesson is patience. By encouraging them to save a little of what they receive, whether pocket money or birthday gifts, they start to see that waiting can bring greater rewards later.
How Growth Builds on Itself
Small, regular contributions can grow dramatically over time. This is the power of compounding — where your money earns returns, and those returns then earn returns of their own. The key is consistency and time, not big lump sums.
A Balanced Mix Matters
Putting all your money in one place rarely works well. Just as a balanced diet keeps us healthy, a balanced portfolio keeps investments resilient. Combining different types of assets — shares, bonds, and funds — helps smooth out the bumps and builds stability over the long term.
Staying Calm Through Market Ups and Downs
Market movements can feel unsettling, but they’re part of the process. Long-term investors are rewarded for discipline and patience. Teaching children that markets fluctuate helps them see investing as a journey rather than a sprint.
Why Start Early
Starting to invest for your child doesn’t just build future wealth — it creates freedom. At 18, they might use their savings to reduce university debt, fund driving lessons, or even contribute to a home deposit. A small, steady commitment today can open doors tomorrow.
Options for Investing in Their Future
Junior ISAs (JISAs): Tax-free savings and investments up to £9,000 per year until age 18. From age 16, your child can take over decision-making.
Child Trust Funds (CTFs): For those born between 2002 and 2011, these can be transferred into a JISA for better growth potential.
General Investment Accounts: Useful if you prefer to retain control, but any income or gains are taxed in your name.
Junior SIPPs: A pension for a child may sound premature, but it can be transformative. Up to £2,880 a year can be invested, with £720 added automatically through tax relief.
Taking the First Step
Start by checking what’s already in place — whether your child has a CTF or JISA.
Setting up monthly investments keeps the process simple and helps even out market volatility (a strategy known as pound-cost averaging).
You can also involve your child in tracking their progress to build engagement and understanding.
Points to Remember
£100 Rule: If savings from a parent earn more than £100 in annual interest, it’s taxed as the parent’s income.
Personal Allowance: The £12,570 allowance is frozen until 2028, so high interest rates could trigger tax earlier for larger balances.
Investment Risk: Stocks and shares can rise and fall — a reminder that time and diversification are key allies.
A Foundation for Life
Helping your child save and invest isn’t just a financial act — it’s a lesson in patience, confidence, and long-term thinking. It sets them up not only for financial stability but for a healthy relationship with money throughout their life.
