Saving for children: With £4.5bn in their pockets, iPod kids flash the cash

In the final part of our guide to young people's finances, we consider the best accounts for teenagers

With more disposable cash than their parents ever dreamt of, today's teens epitomise our "spend now, save later" culture.

With more disposable cash than their parents ever dreamt of, today's teens epitomise our "spend now, save later" culture.

As a group, they carry real financial clout, earning a staggering £4.5bn a year from paper rounds, Saturday jobs and baby-sitting to pay for iPods, mobiles and other consumables.

Unsurprisingly, in a study from Royal Bank of Scotland (RBS) more than a third of teenagers said they preferred to spend what they earnt rather than save it. Yet, despite this, teenagers do appear to be clued up about the dangers of debt.

Two-thirds understand that it is wise to steer clear of owing money, according to research from independent financial adviser support company Sesame.

Of course, what your typical teenager might say and then go and do may be quite different, but it's to be hoped that this early appreciation of the potential danger of credit will translate into a responsible approach to their finances in later life. Their parents may not be the best teachers: personal debt levels among adult Britons currently stand at £1 trillion.

One way that teenagers can better appreciate the value of money is by earning their own. Developing good financial habits early on in life will also pay off when it comes to starting full-time work or going to university or college.

Organisations such as the Personal Finance Education Group, which campaigns for improved financial education in the classroom, are working to change attitudes by giving pensions, savings and managing household finances a bigger role on the school curriculum.

But you can do your bit, too, to help your teenage offspring get into the savings habit - by encouraging them to open their own account.

"It's very easy just to buy things for your children when they ask," says Anna Sofat from IFA Destini Fiona Price. "But by opening an account which they control, they can start to understand what is theirs.

"This will help them learn that once money has been spent, they have to save to build the balance up again."

Accounts vary widely between providers, so don't open one for a child at your own bank or building society without checking what is available elsewhere. Most high-street lenders operate some form of "youth account" giving customers of 16 or over regular balance statements, a chequebook and a cash card.

It is illegal for a bank or building society to offer youngsters an overdraft until they are 18 but they may be offered a debit card such as Electron or Solo, which can be used only if there are sufficient funds in the account. Not all shops or restaurants accept these cards, however, so check before trying to buy.

As for interest, many top-paying accounts for teen savings are phone or internet-based, and that may not be appropriate for a young person's money, says Stuart Glendinning from the price comparison website Moneysupermarket.com.

"The average teenager is going to want a branch nearby so they can go [and pay in and take out money]," he says. "This could be more important than the rate of interest the account pays."

Even so, there are some competitive rates available with branch-based accounts. Nationwide Smart pays 5.01 per cent on £1 and offers a cash card once the holder is 12 years old. Halifax's Save4It pays a similarly high interest rate - 5.05 per cent - but has no cash card until the account holder is at least 16.

Elsewhere, Barclays Plus pays 4.25 per cent on balances of more than £50 and offers a Visa Electron card - if parental consent is given.

There's a free electronic personal organiser for young customers opening HSBC's Livecash account, which pays 4.17 per cent on balances of £1. For those aged 13 and over, the account comes with a Solo cash card.

Holly Boston, 16, from Daventry, has a Smart account with Nationwide, opened for her by her parents in 1995. She pays in money earned from her Saturday job in a cosmetics shop.

"I try to save regularly for the things I want," she says. "The high interest rate means my savings grow quite quickly."

While Holly could have a cash card and a chequebook with this account, she has opted to go on making transactions at her local branch with a passbook.

"It saves me from spending too much money," she adds.

Instead of a young person's saver account, Mr Glendinning says a normal high-street easy-access current account tailored for teenagers could be the best way of helping them get used to banking regularly. He picks out current accounts from Lloyds and NatWest, paying 3.5 and 3.35 per cent respectively.

"These are 'grown-up accounts' paying reasonable rates," he says. "Both offer a Solo cash card for controlled transactions."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Voices
Ed Miliband and David Cameron are neck and neck in the polls
election 2015Armando Iannucci: on how British politics is broken
News
i100
Life and Style
Great minds like Einstein don't think alike
tech
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
science
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
News
A voter placing a ballot paper in the box at a polling station
i100
News
people
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

    £20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

    Ashdown Group: Marketing Executive - 6 month FTC - Central London

    £25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

    Ashdown Group: Junior Project Manager (website, web application) - Agile

    £215 per day: Ashdown Group: Junior Project Manager (website, web application ...

    Guru Careers: Software Engineer / Software Developer

    £40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

    Day In a Page

    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'
    Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

    Flesh in Venice

    Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
    11 best anti-ageing day creams

    11 best anti-ageing day creams

    Slow down the ageing process with one of these high-performance, hardworking anti-agers
    Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

    Juventus vs Real Madrid

    Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
    Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

    Ashes series looks a lost cause for England...

    Whoever takes over as ECB director of cricket, says Stephen Brenkley
    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power