You may not be able to gift wrap a tenner. And it might not cause whoops of excitement on Christmas morning. But here’s an idea: why not buy a cheapo present and bung a bank note in as well? Children are mercenary little things and they like money. They will certainly like it more than ill-chosen though well-meant presents which end up being hidden away and sneakily re-gifted. Giving cash can be the sensible option.
But of course, that’s only true if the cash isn’t wasted. Here is where you can be clever and ensure they don’t use it to panic buy rubbish but save it instead. Children enjoy having money in the bank – or at least, the ones I know do. So why not encourage them to do something with it other than bung it in the piggy bank?
That means setting up a good savings account ready for your child to pay in their Christmas cash. Probably the best, widely-accessible kids’ account at the moment is Nationwide Smart Limited Access. It pays 2.5% on just £1. The drawback – or advantage – is that only one withdrawal can be made a year. If you want a standard easy access kids’ account from a High Street provider then Bank of Scotland/Halifax/Lloyds (all part of Lloyds Banking Group) pays 2% on £1.
However the best rates are on Junior Isas (Jisas). These aren’t for kids to stow away a few pounds of pocket money (you need to run it). But there’s nothing to stop you taking the £50 that granny gave them and investing it for them. Do remember though that with Jisas, the money has to stay in the Jisa until the child is 18 – although you can move it to another provider (or into a shares Jisa) if you want to. Currently the top Jisa rate is Nationwide, paying 3.25% on £1.
If you don’t want to give banknotes, then you might consider a pre-loaded cash card. These have the advantage that they teach kids about using cards and they can’t go overdrawn. But there are fees. If your child is at least 11, then they can have a bank account: have a look at TSB’s Under 19s account which pays a tasty 2.5% on credit interest. There are more recommendations here. As Jane said on BBC Breakfast on Tuesday, giving children the responsibility of handling money will help them budget in the future. And that’s a present which will last long after Christmas – unlike many toys.