Shop around when saving money, experts say

Tue, 13 Dec 2005

Financial experts have been urging parents and family members to start saving money towards kids' financial futures rather than giving them expensive toys for Christmas.

The Children's Mutual predicts that by March next year, 46 million presents will have ended up broken.

"If parents asked for the value of just three gifts, an average of £50, to be put into a savings plan every year for a child from age one, the money could grow to more than £1,400 in 17 years' time," says the chief executive, David White.

Price comparison website Moneysupermarket adds that with more than 25 children's cash-based savings accounts available, parents should shop around to get the best returns on their savings.

"While perhaps not as enticing as the latest toy, setting aside Christmas monies to start up a savings child savings account will enable parents to give their child a truly valuable start for the future," says the website's director of savings, Stuart Glendinning.

He points out that some children's savings accounts offer interest rates of up to ten per cent.

Over a period of time, putting "even small additional amounts" away boosts the interest that is earned on savings, Mr Glendinning says, "especially considering the interest can be tax free".

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