Children need advice about savings

By looking for the best savings interest rates for their children and building up funds, parents can help their offspring avoid debt pitfalls.

Kate Moore, head of savings and investments at Family Investments, said that building up a strong financial base for children offers them the best start in life, especially considering the increasing number of financial commitments the next generation will face – including higher house prices and increased university tuition fees.

She explained that if parents want to pay for their children to go to university, they are more than likely to need around £27,000 to cover the costs, they will need to save a minimum of £82 a month for each child from birth.

However, she conceded that this may not be possible, particularly as households are facing rising levels of debt and are struggling to make ends meet in the current financial climate.

"Even when savings does make it to the top of the to-do list, it can be a difficult decision where to save. The launch of the Junior Isa this week is good news as there is now once again a government-backed savings option for all new parents," Ms Moore suggested.

This view was echoed by Ed Bowsher, head of consumer finance at lovemoney.com, who said that the more education kids can have about money the better as debt can ruin people's lives.

He suggested that, in addition to contributing to accounts with the best savings rates, more needs to be done to ensure children are given the insight they need into the importance of budgeting and saving.

"Sensible money management can make a huge difference to the quality of people's lives, so more financial education in schools makes a lot of sense," he added.

So for the best start in life, parents should consider building up money in savings accounts, while demonstrating to children the benefits of putting money aside.

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2011-11-04 12:59:42 © Moneyextra.com