Martin Lewis explains best way for new mum to save for newborn baby
MARTIN Lewis has explained the best way for new parents to save up thousands for their kids.
The money saving guru revealed how parents could make their cash go further for their children on This Morning.
He gave his top tips to a new mum phoning into the show asking whether she should put money in a savings account, Junior ISA or Premium Bonds account.
She said she wanted to save around £100 a month for her two-week old son to set him up for when he's older.
Martin broke down the pros and cons of each money saving method the viewer listed.
He ultimately recommended putting cash into a children’s regular savings account.
He also gave examples of some banks with the best Junior ISA account interest rates.
A Junior ISA is a tax-free savings account for under 18s where you can save up £9,000 a year.
Martin said that while many parents set up a premium bonds account to put aside cash for their kids, it might not be the best savings method.
This is because it’s unlikely that you’ll win a big sum.
He recommended it’s best to put your money into a children’s saver account instead.
“Even if you have £1,000 in premium bonds over a year, with typical luck you’re likely to win nothing, whereas children can get up to 3.5% interest in the top savings accounts,” he said.
“I’d be looking at putting it in the top savings accounts, Halifax or Barclays regular savers accounts, up to £100 a month.”
However, Hargreaves Lansdown's Sarah Coles told The Sun that it could be best choose a Junior ISA if you’re planning to save over a longer period of time.
“The cash versions of these are tax-free, and because they are tied up until the child is 18, it removes the temptation to dip in as you go along,” she said.
“If you’re holding it up to 18 years, a stocks and shares Junior ISA will rise and fall over the short term, but have tended to grow much faster than cash over the long term.
“Investment won’t suit everyone, but if you’re putting money away for a child for five to 10 years or more, it needs to be part of the discussion.”
Not everyone has £100 spare to save, though.
The Sun has previously revealed how saving just £25 into a Junior cash ISA could set your child up with almost £11,000 when they turn 18.
But if you’re looking to save a bigger windfall than this for your little one, then you could end up with £18,000 by the time they’re 18 if you save £1.67 a day.
If you stash this amount into an investment account and leave it alone it'll be worth £18,000 in 18 years' time, according to The Share Centre.
Martin Lewis also explained how unpaid carers can claim £1,000s towards their pension on the This Morning show.
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