Whether you start with a piggy bank or a savings account, getting your children into the savings habit early on can be a great way to help them manage their money later in life.

A little can also go a long way when you're saving on their behalf, and with the right planning you can build up a pot of money to help them cover the costs of further education, housing, and more.

From this month onwards, millions of teenagers will start gaining access to child trust funds that were set up between 1 September 2002 and 2 January 2011.

HMRC says some children might not be aware there are accounts in their name and has created an online tool to help young people and their parents or guardians to track down their accounts.

If you weren't eligible for one of those accounts, or are looking for an alternative option, read on to find out more about saving money for children.

Do children pay tax on savings?

While you might assume children don't have any tax responsibilities, they are in fact taxed in the same way as adults - the only difference is that they don't usually have the income that adults do.

Just like adults, children are entitled to a tax-free allowance on savings interest up to £1,000 for basic-rate taxpayers.

There is a catch, however, for parents looking to save on behalf of their children. If the money you give to a child gains more than £100 in interest in the tax year, all of the interest will be taxed as if it's your personal income.

This applies to money given by a parent or step-parent, so other relatives or friends can give as much as they want to.

It does not apply to money in a junior ISA or child trust fund.

Savings options for children

Child trust funds were discontinued in January 2011, but if you already have an account, you can contribute up to £9,000 a year to it tax-free. Your child takes control of the account when they turn 16, and can withdraw from it from age 18.

Junior ISAs can be set up for children under the age of 18 who live in the UK and allow you to save up to £9,000 tax-free in 2020/21 - but be aware that this counts as part of your £20,000 annual ISA allowance.

You cannot have a junior ISA and a child trust fund at the same time.

Children's savings accounts often have more generous interest rates than those for adults, but they may have more restrictions. Children over the age of seven can operate a savings account themselves.

Premium bonds from National Savings & Investments are a secure way to save if you've already used up your other tax-free options.

Rather than earning interest through these, you have the chance to between £25 and £1 million in tax-free prizes each month. You can buy premium bonds on behalf of your child, grandchild or great-grandchild.

Trusts are another option for parents or grandparents to transfer money and assets to a beneficiary. This involves transferring ownership of those assets to a trustee, and setting up rules for how the trust is managed.

Depending on the type of trust you set up, this can offer you more control over the way the money is used than you would have if you transferred it directly. The tax implications of this can be complicated, however, so always seek professional advice before setting up a trust.

Speak to us about planning your family's finances.