It's no secret that millions of young people right now are suffering at the hands of low wages and high, inflated prices.
Coupled with sky high tuition fees and the housing bubble, it means for many, the struggle will continue for years to come.
If you're worried your child could one day fall into the same financial trap, it may be worth starting to save for their future now.
Opening a savings account for your little one is a great way to build up a nest egg for their later life - it can be used for anything from university, to a home deposit or even to travel the world one day.
More importantly, perhaps, is that it can help teach them the value of money from a young age - ie you may start it off with small amounts which they later top up with birthday money.
Best junior cash ISAs right now
We asked Moneyfacts for the best rates on junior ISAs right now. For transfers from child trust funds, contact the provider directly.
- Loughborough Building Society: 2.5% variable, until the age of 18, £1 minimum, available by post or in branch only.
- Bath Building Society: 2.5% variable, until the age of 18, £1 minimum, available by post or in branch only.
- The Family Building Society: 1.65% variable, until the age of 18, £1 minimum, available in branch and by post only.
For investment ISAs, MoneySupermarket also has a list of the best buys and any incentives you can earn when you join.
How old does my child have to be to start saving?
As a parent or guardian, you can start saving at any age up to around 15, through a bank or building society.
When they reach the age of seven, you'll have the option to transfer it over to their name.
Most banks and building societies will advise giving them access once they hit the age of 16. Junior ISAs and child trust funds transfer over at the age of 18.
How much can I save?
For the current tax year, the tax-free allowance is £4,260. However, you can open an account with anything upwards of £1 - you don't necessarily need a lump sum to kick things off.
Will I have to pay tax?
Junior ISAs are tax-free to the limit, however new rules mean you can still save elsewhere to more than £17,000 a year for your child without having to pay tax.
This is because most children don't work so they can use all of the following:
- Their personal tax allowance of £12,500
- £5,000 staring savings rate
- £1,000 personal savings allowance
Combined, this means in theory, you can save up to £17,850 for your child BEFORE you have to pay tax.
What's the best option for my child?
The type of account you can open will depend on the age of your child and when they were born:
- Junior ISA (JISA): For children born BEFORE 1 September 2002 or AFTER 2 January 2011.
- Child Trust Fund (CTF): For everyone else (kids born in between the above dates).
- A regular savings account, fixed rate or easy access one: Which you can top up/withdraw as and when (more on this below).
Parents can transfer savings from a CTF to a junior ISA if they wish to do so, this will remain tax-free. The main benefit of this is often higher rates as JISAs can be more generous.
How does a junior ISA work?
A junior ISA is a tax-free savings pot, just like any other ISA. There are also two types - a cash junior ISA and a stocks and shares junior ISA.
You can open a junior ISA for your child and save into it like any other account. The difference is, the money belongs to your child - although they can't access it until they're 18.
Junior ISAs are available from a number of different providers, including building societies, mutuals like Scottish Friendly and stock market investment firms like Hargreaves Lansdown.
And while it may feel safer to save in cash, don't forget to check out the reasons why opening a junior stocks and shares ISA may be a better bet.
How do child trust funds work?
Child trust funds were introduced by the Labour government in 2005. The idea was to make sure every child had some money in savings by the time they hit 18.
However, in 2011 they were controversially scrapped in favour of junior ISAs. This means they're now legacy accounts.
If you've already got a CTF, since April 2015 you can transfer the savings into a junior ISA - these often offer better rates.
If you want to keep it, however, you can. The allowance is £4,260 a year tax-free.
If your child was born between September 2002 and May 2011 you probably received a £250 Government grant to open a CTF. If you were on a low income you may have received an extra £250 from the Government. This £500 sum (or £250 for those on a decent income) then repeated itself when the child turned 7. You may not know about this - but if you think you may have qualified, you can trace it using this tool.
We've got a full guide on child trust funds and how they work, here.
What about other types of savings accounts?
While the above accounts tend to be more popular, you may be able to earn even more on your child's cash through one of the below. We've broken do your options below.
Easy access savings accounts
Open one of these accounts and you can effectively pay in and withdraw money as and when you like penalty-free (source: MoneySupermarket).
Best easy access accounts for kids
Santander 1,2,3 Mini: 1% (£999.99 or less), 2% (£1,000 to £1,499.99) and 3% (£1,500 to £2,000) minimum pay in £1, available online and in branch only.
HSBC My Savings: 2.5% (£10-£3,000), 0.25% (£3,000+), minimum pay in £1, available online and in branch only.
Regular savings accounts for children
This allows you to put money in each month - and often comes with a minimum amount, ie £20 a month for a full year.
They pay decent rates but you have to commit to it - and won't be able to pull out. After 12 months the account will end and you'll have to switch elsewhere.
Best regular savings accounts for kids
Dudley Building Society: 3.5%, pay in £10-150 a month, available in branch and by post.
Saffron building society Children's Regular saver: 3.02%, pay in £5-100 a month, available by post and in branch only.
Halifax: 2.5%, pay in £10-£100 a month, available online and in branch only.
For more advice on how to choose a savings account, click here.