The exam results are published and there is much rejoicing, but when the celebrations have died down and the university place is secured, you’re face to face with the practicalities of this monumental change for your family.

Parents know that children are expensive: pocket money, maintenance at university, their first house … financial support from parents has become as much a part of the banking system as a commercial bank. While this is an accepted part of the parental yoke, alleviating some of the financial pressure comes down to planning – and time.

The gift of time

Think sooner rather than later when it comes to savings in general but when it comes to saving for children it really will make a material difference to the way their money grows over time. If you start from birth, even relatively small amounts paid into a savings account will add up to a significant sum.

There are many options when it comes to saving for children, from a standard savings account to a Junior ISA (JISA) or a pension fund.

Choosing which route to go depends on what you want to happen to the money. Savings accounts come in all shapes and sizes and the interest rate quite often reflects the flexibility of the account. Generally speaking, if you’re prepared to lock your money away then the rate will be better.

With a JISA, the money is locked away until the child turns 18. Even though they can take responsibility for the account when they turn 16, they can’t access any of the money.

There is also the choice to be made between a cash ISA and a stocks and shares ISA. Many parents are reluctant to take risks with their child’s money and as such cash ISAs have proved more popular, despite the fact that stocks tend to outperform cash. When investing for children you’re usually in it for the long term so it may make sense to go with stocks – but advice should always be sought.

Although the savings are locked away for much longer, a pension is one of the most straightforward savings options: they can be opened by anyone for any UK resident under 75 years. Charges are capped and there’s flexibility in the amount and frequency of contributions. With children born today unlikely to enjoy the same level of retirement funding as those retiring now, being more self-reliant is going to prove crucial in maintaining their financial security.

Pension savings also benefit from tax relief, so their savings get a little boost from the government. The benefits aren’t only to the children either. If you’re a grandparent in the happy position of having excess income (not capital), contributions to a grandchild’s pension will take money out of your estate without affecting your annual gifts.

Whether in a standard savings account, JISA or pension fund, the savings will also benefit from the magic of compound interest (which is when you earn interest on your interest).

Dark side of the moon

Communication can be difficult with older children, but somehow they can always find the words ‘can I have some money?’.

You’ve probably drummed into them the importance of budgeting and limiting their use of debt but new challenges arise when they go to college. Most will take advantage of a maintenance loan, which is generally sufficient to cover accommodation costs, leaving a little over for living expenses (and needs to be paid back in the same way as the tuition fees loan).

However, there is generally a shortfall in what is needed to live, so the new student has the option of getting a job or coming to the Bank of Mum and Dad – a popular option.

However, you can plan for this outcome. Money put aside from birth in an ISA, for example, would have built up a tidy sum that can be used to help cover student expenses. Even if you start saving when they enter 6^th Form there will be a cushion saved for emergencies.

If for any reason your child ends up not going to university then the lump sum is there for them to use towards a deposit for their first home, or to continue to build on.

Moving on

Property deposits are high on the list of unachievable goals for many young people.

Some parents gift the deposit to their offspring but if gifting isn’t an option, saving early is key.

With the Help to Buy: ISA now closed to new savers, a Lifetime ISA (LISA) is an alternative savings route. Open to 18-40-year-olds, it offers a government bonus of 25% on contributions (max £1000, payable at the end of each tax year, until you are 50) and you can save up to £4000 per year. It is possible to access funds without penalty before age 60 if the money is to be used to buy a first home. Touch the money for anything else though and a hefty 5% charge on your pot is payable – and you lose your bonus. Once you are 60 you can take the cash and bonus tax-free – or just keep saving, as there is no upper limit. However, saving in a LISA will reduce the amount that can be paid into other ISAs.

We all want to be there to support our children – start building the framework to help them as early as possible.