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Baby, it’s time to start saving.

storkCongratulations to Megs and Harry on their baby news. Isn’t that a child who’s going to have an unfair advantage in the looks department (along with other things)? Anyway, while it’s unlikely that the Sussex family will be worrying how they are going to afford disposable nappies, other expectant parents may well have both short and long term money concerns.

Actually, tiny babies are pretty cheap – particularly with first ones, you’ll be given loads of clothes and toys so you won’t have to buy those. Breastfeeding is, obviously enough, free and while formula is pricey it’s cheaper than the real food junior will be consuming in terrifying quantities when older. You can easily find secondhand cots and the like (though not car seats: always buy new) via online sites or NCT sales. And your expenses will plummet as you’re not going to be going anywhere exciting for holiday or nights out for ages. Also, while you’re on maternity leave your clothes budget will be low though your washing expenses high – stock up on washing powder now for cleaning up all those baby regurgitations.

But if you can bear it, now is the time to look to the long term. Before you know it, junior will be off to school followed shortly after by university. So when they are tiny is a good time to start putting money aside for their future. With a long-term approach, then investing is the best way into a Junior Isa as Jane pointed out in the Daily Mail last week (see here). The downside is that you can’t get at the money – and when your child is 18, they get control of it. So you have to accept this – or maybe just don’t tell them about the Jisa until you think they are responsible enough to handle a lump sum. With a share Jisa, you can hold any fund or shares you like: so much choice can be confusing, of course. An easy and cheap option would be a stock market tracker – see our guide here on how these work.

If you really are against investments – and there is a risk that if you put money in shares you won’t get it all back – then there are cash Jisas, but you won’t be royally rewarded for your caution. Indeed, Nationwide Building Society recently called time on its Jisa, stopping new investments in favour of a simple one-size savings account. Its Nationwide Future Saver is a pretty good deal - better if a parent is a Nationwide current account holder when the rate is 3.5%, otherwise 2.5%. However, I would take a look at Halifax’s Kid’s Monthly Saver. You save £10-£100 a month by standing order and the rate is 4.5% fixed for a year: after a year, the money moves into a Kid’s Saver Account. Easy peasy.

And see our guide to investing for children here.

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Wednesday, 19 December 2018