It's never too early to teach kids to save

27 April 2012 10:56:37

Save up to £3,600 a year in a junior ISA.

You may believe children should grow up without thinking about money for as long as possible, but this stance could actually do them more harm than good. Rather than shielding kids from the financial realities of life, it's better to teach them the importance of saving at an early age.

Money 'among most important lessons'
Joanne Mallon, who has authored a book on introducing toddlers to the value of money, believes that this lesson is one of the most important things that parents can pass on to their children - and the earlier the better. She explains: "It can be tough for children to get the concept of money and saving up for things, but it's one of the most important lessons we as parents need to teach them - particularly in our current, cash-strapped times."

Teach kids to work for their cash
Ms Mallon believes that doling out cash and gifts "willy-nilly" is one of the worst things you can do as a parent, because children will never learn the value of money in this way. Instead you should consider giving youngsters money in exchange for jobs around the house, such as cleaning, ironing or washing the car.

Consider opening a savings account
Another important step you can take is to open up a savings account for your children. "Encouraging them to save hard for a big item that they want can really help them to value what they get," Ms Mallon explains.

If you want to get your child into a good savings habit, why not take a look at one of the new junior ISAs that are available? These are a new type of tax-free account that enable parents to save for their children. Brought in after the government decided to scrap the controversial Child Trust Fund, junior ISAs are available to any child under the age of 18 who lives in the UK and does not already have one of the old-style accounts.

If you decide to open a junior ISA for your child, you will be able to deposit £3,600 into the account each tax year, with no tax paid on any of the interest that is earned. This can help youngsters to learn the importance of regular saving, with the added benefit that they cannot touch the money until they are 18 and, hopefully, sensible enough to spend it wisely!

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