Set aside funds to give kids a head start in life

You can't put a price on a family. However, providing for your child takes a hefty chunk out of a family's budget. Estimates from the US government suggest that up to the age of 17 paying for a child's education, clothes, food and entertainment costs between $250,000 and $300,000 (Dh917,500 and Dh1.1 million).

Added to these costs, most parents want to spoil their children, buying them new trainers or the latest toys - but the same small amount of money could actually prove much more valuable in the future. A capital sum will certainly give them a head start in life. With a tangible amount to work with it will be much easier to plan for major expenses such as education or even a deposit on a house.

The best way to ensure that your child is well provided for and given the best start is to open a dedicated savings account now. As with all savings accounts, the sooner you start the greater the interest will be. When a child is born, you could send the account number to grandparents, family friends and other benevolent well-wishers and suggest that for birthdays and other such occasions they send money rather than buying another soon-to-be-forgotten toy.

It saves on shipping and packing costs, especially for relatives of expatriates, and saves your house from being cluttered up with well-meant but ill-chosen gifts. There is also the added bonus that they will be helping to secure the child's future.

A number of small donations made over many years really add up and can make all the difference at a later, crucial stage in life.

It is also a good idea to involve your child in their savings process, providing them with an invaluable lesson about money. Certain aspects of a money lesson can vary with a child's age but it's never too early to learn about the value of money and the importance of savings. This would instil a greater understanding of savings and better prepare your child to manage their own money tomorrow.

Depending on a child's age and maturity, you can provide different levels of information and responsibility regarding their money and various savings ideas could be discussed within your family. A "piggy bank" could be a fun way of saving for a young child and you could teach an older child always to save 10% of their allowance and earnings from part-time work or chores.

You could also let your child see that your dedicated savings account is earning interest and their future pot is growing everyday. At a certain age you could even take your child to the bank to open their own savings account after their initial money lessons.

To provide clarity for you and your family further down the line many people spend time setting up a range of different accounts for their child. Using a chronological timeline you can work out the expenses your child will incur in primary and secondary education, such as school holidays, and separate them from the expenses incurred later in life.

Money for tertiary education, a wedding and a deposit on a first home can be placed into a high interest fixed account. It is also very common to create a security system around the account which will release the funds once the child has reached a milestone birthday.

Having a savings plan for your child will not only give you great peace of mind but will also go a long way in making their future financially secure.

- The writer is the head of personal banking at Lloyds TSB Middle East.