saving for your newborn

When a newborn is on the way, you’re likely faced with thoughts such as how to manage the household finances on maternity leave, or how to afford all the kit you need. However, it’s also important to give some thought to ways you can start saving for your newborn.

Whilst it isn’t essential to save for your children, it can make a huge difference to them as they embark on the challenges of adult life, such as climbing the property ladder, buying their first car, and of course getting through university.

By starting to save for your little one as soon as they are born, it will become a regular and easy commitment which isn’t missed from household spending. Gradually, over the years, your child’s funds should grow, and you’ll be able to provide that little one who’s now a fledgling on the precipice of adulthood a big helping hand. It could be one of the greatest gifts you can give them. But how do you do it?

Investing for your newborn

By starting early, your little one will not only benefit from deposits being made over a longer period of time, but also from compound interest.

However, it is worth considering what savings options are available, as not all accounts operate in the same way, or aim to achieve the same goal. For example, you could set up a basic children’s bank account and as your baby becomes a child, this might be somewhere they can learn to save pocket money or birthday gifts. These accounts can normally be started with just a pound or two. However, it’s not always the best place when you’re considering longer-term savings.

Junior ISAs
Junior ISAs are a great place to start saving for your newborn’s long-term future. They can be cash or stocks and shares based. Generally, a stocks and shares Junior ISA, such as the Shepherds Friendly Junior ISA aim for higher levels of growth, in comparison to a cash Junior ISA.

Junior ISAs are an excellent tax-efficient way of saving for a child’s future. Any growth or interest paid is tax-efficient and the child won’t be able to access it until they are 18 years old. Stocks and Shares Junior ISAs, like adult Stocks and Shares ISAs, are invested in assets such as shares and bonds. Whilst the value of these can go up and down, the aim is that over time they will increase. The annual Junior ISA allowance per child is £9,000 (as of the 2023/24 tax year).

Looking beyond first steps and first words

Saving for your newborn is a great way of looking beyond their first steps and first words. If you have any questions, you can speak to our member services team by calling on 0161 428 1212 or email [email protected]