Having a grandchild and watching them grow is one of life’s greatest joys. From their first cuddles to their first steps, every moment matters. As a grandparent, we want to support them however we can. Those pound coins taped in a birthday card will soon add up in the right savings account and could end up helping with their education, first car or a deposit for a home.
Starting a savings plan for your grandchildren can help ensure they have a little extra as they grow into adulthood. Here’s how you can start saving money for your grandchildren and some of the best ways to do it.
How can I save money for my grandchildren?
There are a few different ways you can start saving for your grandchildren, each with its own benefits and considerations. One of the most common methods includes opening a savings account, such as fixed term ISAs or Bonds, including Junior ISAs and children’s bonds.
We don’t offer junior savings accounts right now, but you can choose to save for a grandchild in a standard savings account like a Fixed Rate ISA or Fixed Rate Bonds savings account if the terms and rates suit better.
Here’s a breakdown of some of the options available to you:
1. Open a children’s savings account
Setting up a savings account in your grandchild’s name can be a tax efficient option. Children’s savings accounts are taxed like adults’ accounts; however, most children earn below the personal allowance threshold (£12,570 for 2024-25), making their savings tax-free.
You can manage these accounts freely, depositing as much or as little as you wish. Remember to check the terms and conditions as these can vary across banks.
2. Pay into a Junior ISA
A Junior ISA is a good option for as a long-term gift for your grandchild. The funds are locked away until their 18th birthday, at which point only they can access the money.
The parents or guardians must set up the Junior ISA, but other family members, like a grandparent can contribute. This makes it a flexible way to contribute to your grandchild’s savings pot. There’s currently an annual limit of £9,000 for 2024-25.
Once your grandchild turns 18, the Junior ISA will convert into an adult ISA, giving them control over their funds.
3. Help with a house deposit
Gifting to grandchildren will be different depending on your circumstances and their age. If you have an older grandchild, they may need a little financial help now. You could consider contributing to your grandchild’s house deposit. A larger deposit can reduce their mortgage payments, easing their financial burden. You can find out more about family gifting in our hub.
4. Casual gifting
Regular gifting may not suit your financial picture. If this is the case, think about lump sums you can gift as and when suits. You can gift up to £3,000 annually without incurring tax. Additionally, you can give small, tax-free cash gifts of up to £250 to as many individuals as you like within the tax year.
Savings accounts for grandchildren
Savings accounts are a simple and flexible way to start your savings journey. They typically offer you peace of mind, with steady growth on your savings and minimal risk. Here’s some of the key benefits:
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Easy to manage: most savings accounts allow you to easily deposit cash and you can choose when and how much.
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Low risk: Not only will a trusted bank like Hodge protect your money while it earns interest, up to £85,000 will also be protected by the Financial Services Scheme. Find out more.
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Accessible funds: You can choose an account that works for your grandchild, such as giving them access when they reach a certain age.
Can a grandparent open a savings account for a grandchild?
Yes! Grandparents open up savings accounts on behalf of their grandchildren all the time. If you’re planning on opening a savings account for a child, you’ll just need to have the child’s birth certificate or proof of identity, personal identification for yourself and money to deposit into the account (limit varies depending on the savings account).
Find out all you need to know about family gifting in our hub.
Opening a savings account for a grandchild
At Hodge we offer fixed rate ISAs and fixed rate bonds that could be a great fit for long term savings. Take a look at our current savings rates here and more information to guide you through the best option to meet your needs.
When choosing a savings account it’s best to check the interest rate being offered, the accessibility to the money, such as fixed or easy access accounts, as well as placing your money with a trusted bank or financial service.
How to start saving money with Hodge
We don’t offer Junior ISAs right now
Explore our savings account and find the right type of savings account for you. All our savings accounts have been designed to offer customers competitive rates alongside convenient features.
Explore our savings accounts or contact us.
This article is correct at time of publishing and for general information purposes only. We recommend you speak to a professional financial adviser for advice. You can find a financial adviser and further personal finance information at unbiased.co.uk.