It’s no secret that raising a child in the UK has significant financial challenges. The costs can add up quickly, from the early expenses of nappies and nursery fees to after school clubs, then the later difficulties of university tuition and housing deposits.
It’s estimated that the average cost to raise a child to the age of 18 in the UK is over £200k if you include expenses like childcare, education, housing, food, and transportation. And that doesn’t take into account luxuries like holidays, or the lost earning potential by simply being able to work less hours effectively.
So it will come as no surprise that many parents feel stressed about their children’s future. According to UNICEF UK, 87% of parents with children under five are worried about their children’s future opportunities. This highlights the common concern among UK families about long-term stability and prospects.
The good news? Starting early can help. By making smart financial decisions today, you can create a secure future for your child. We asked UK wealth experts for their best practical advice so you can act confidently.
What’s the Best Way to Start Investing for Your Child’s Future?
Many parents begin by choosing simple options like savings accounts or Junior ISAs. However, if you want to build a significant fund for things like university or buying a first home, planning for the long term is essential.
“Start with your goals,” says the team at PMW Chartered Financial Planners. Whether it’s helping with future education costs, contributing toward a first home, or simply giving your child a financial head start, having clarity on the purpose can shape a more effective long-term approach. That might include a mix of tax-free savings, investment planning, or exploring tax-efficient options available to families.
A popular option is the Junior ISA (JISA). For the 2025-26 tax year, you can invest up to £9,000 each year in a JISA, choosing either a cash option or stocks and shares. The money grows tax-free and will be available to your child when they turn 18.
Even small and regular contributions can grow significantly over time due to the power of compound interest.
Is It Worth Getting Financial Advice If You’re Not ‘Wealthy’?
Many people think that financial planning is only for wealthy people. However, different income families can benefit from expert advice, especially during significant life changes or financial transitions.
“You don’t need to be wealthy to build a meaningful plan,” says financial whizz Dan Stevens. “The key is starting early and being consistent, and anyone can contribute which is a better birthday or Christmas present that excessive gift giving.”
“Take a Junior ISA earning 4% interest,” he explains. “If you put aside £100 a month you may be wasting on takeaways, in just 10 years your child could have nearly £15,000 with over £2,700 of that coming from interest alone based on available 4% rates. Start from birth and that figure could exceed £31,000 by the time the child turns 18, a fantastic head start toward university or a first home. You really need to maximise your pension contributions and ISA allowance to get the best tax relief benefits”
The numbers speak for themselves for long-term savings and investments: even modest, regular contributions can grow into a powerful financial foundation over time. You can use this simple calculator to see the power of compound interest.
So if you are adjusting to having a single income, preparing for a growing family, or considering property investments, an authorised financial adviser can provide personalised methods for your individual circumstances and financial goals to help you make informed decisions.
What Do Most Families Overlook When Thinking About the Future?
Many parents focus on essential issues like daily expenditures and future university education fees. But, it is easy to overlook other important factors that are less obvious:
- Emergency Funds: Having money saved can help your family during tough times, like losing a job or facing medical bills.
- Wills and Guardianship: Proper legal documents can give you peace of mind about your child’s future.
- Inheritance Planning: Understanding how your assets will be divided can stop arguments and help ensure your child’s financial safety, and limit capital gains exposure.
Taking safety measures in these areas can help keep your family safe and secure in the future.
How Do You Involve Children in Financial Planning?
Educating children about money management early helps them learn to be financially responsible in a way that is appropriate for their age.
- Young Children: Use everyday situations, like shopping, to talk about budgeting and understanding the value of money.
- Teenagers: Help them manage a simple budget by paying them for small jobs to understand the concept of working, then use that money to buy treats so they learn about income and expenditures.
- Young Adults: Talk about savings accounts, investments, and credit to prepare them for financial independence.
Talking to your child about money helps them learn essential skills for their future, but teaching that hard work equals luxuries is a great life lesson.
What Support Is Available for UK Families?
The UK government offers several programs to help families plan for their kid’s futures.
- Junior ISAs: You can save up to £9,000 a year without paying tax.
- Child Trust Funds (CTFs): The UK government established Child Trust Funds (CTFs) with contributions for children born between 1 September 2002 and 2 January 2011. You can transfer these to Junior ISAs for better returns.
- Tax-Free Childcare: If you are a working parent, you can get up to £2,000 per child each year to help with childcare costs.
- 30 Hours Free Childcare: Starting in September 2025, the government will offer 30 hours of free childcare per week to working parents with children aged nine months to four years.
Exploring these options can provide valuable support and help you reach your long-term planning goals.
Final Thoughts
Planning for your child’s future is something you can easily put off thinking about, but taking the first step is crucial. To give your child the best possible start in life, set clear goals, getting the proper advice, and using available resources. This will help you create a strong financial foundation for your child.
Keep in mind, it is about making progress and not being perfect. Every step you take today helps create a more secure and prosperous future for your child.
