Last-minute presents: How to give kids cash this Christmas

Here are some ideas for giving kids money for Christmas, ranging from funds and Premium Bonds to shares in their favorite brands

Junior ISAs, premium bonds, and pensions are just a few of the ways you can give money to kids.

Christmas is days away, but before you head to the shops to grab the hottest toys for 2025 such as the Star Wars crystal light saber, a L. Oh. Would you be willing to exchange TY Bouncers or L Surprise Magic Flyers for a pension, stocks, or a monthly lucky dip with Premium Bonds?

To be fair, the toys sound entertaining, and while I'm not advocating against giving kids gifts they can open on their special day, you could improve their financial prospects by giving them cash gifts. If you're at a loss for a last-minute Christmas gift idea, here are some easy wins and how to give the kids the gift they will love.

Lucky money.

Although cash might seem uninteresting, it's quick, simple, and the kids (depending on their age) adore it.

However, allow me to share with you a brief story about why money represents so much more than just a quick win gift.

Giving money is not only customary in my culture, but it also brings good fortune. In Hinduism, an additional 1 is always added to gifts of cash, so if you wanted to give 50, you would add 1 to make it 51.

You might ask, "Why bother" However, odd numbers also represent endless prosperity, and if you give an extra pound, you are giving the gift of continued good fortune rather than just cash.

Thus, if you are putting money in an envelope this year, add an extra pound and wish them luck.

Get their Junior ISAs filled out.

You might prefer to give them a boost to their savings for the future rather than giving them cash.

If so, why not increase their junior ISA (JISA) and allow their funds to grow tax-free until they turn 18?

This Christmas, if your child or grandchild is still very young, let compound interest work its magic by investing the money in stocks and shares of JISA, which may outperform cash.

According to calculations from investment platform AJ Bell, if you invested £1,000 annually from the child's birth until they turned 18, they would have about £8,000, assuming an average investment return of 5% as opposed to the usual 2% cash return.

Since you would be investing over an 18-year period, which is plenty of time to allow your money to grow and benefit from stock market gains, the returns could be higher.

However, JISAs are extremely rigid; once funds are deposited, only the child, upon reaching the age of 18, may withdraw them. You might not be able to stop them if, at the age of 18, they want to spend the entire amount on a house party because the money will legally belong to them as well.

In light of this, make sure to instill sound financial practices.

AJ Bell suggests the following three funds for your child's Junior ISA.

Fidelity Index World is an inexpensive passive fund that tracks the world stock market and costs just 0.12 percent annually. JP Morgan Emerging Markets Investment Trust Accumulation Emerging markets may be an option if you have a long-term outlook and are willing to take on a little bit more risk. In emerging markets, the trust makes investments in about seventy major corporations. The annual cost is 0.79 percent. If you enjoy investing in sustainability, Liontrust Sustainable Future Global Growth is a fund that makes investments in businesses all over the world that offer or manufacture sustainable goods and services. Each year, it costs 0.85 percent. You might even include stocks of their preferred brands, such as Apple or Disney.

Swap a pension for Peppa Pig?

A Junior Sipp (self-invested personal pension) is a tax-efficient way to start saving for a child's retirement fund from birth.

Each tax year, you can pay up to 2,880, plus an additional 720 (20 percent tax relief) from the government.

A Junior Sipp can be funded by either parents or grandparents.

You would save 64,800 over the course of 18 years if you contributed £2,880 annually to a child's SIPP and added 12,960 in government tax relief. The pension would be worth an astounding 107,619 at the age of 18 if those contributions increased at a compound annual growth rate of 5%. According to BestInvest's calculations, the pension would tip over £1 million by the age of 62, right before retirement, even if no more contributions were ever made after this age.

The only drawback is that they will have to wait a very long time to receive this gift because the current minimum age is 55, but it will increase to 57 on April 6, 2028.

Could kids with premium bonds become mini-millionaires?

NSandIs Premium Bonds are a well-liked option for financial gifts and could offer your children a monthly chance to win a £1 million jackpot.

Anyone can purchase Premium Bonds for £25, but if you're buying for a child, the parent or legal guardian will be in charge of the bonds until the child turns 16.

The kids will enjoy looking for a prize every month, even though Premium Bonds don't pay interest, which might motivate them to save.

Apps for pocket money.

Lastly, you could simply use these apps to increase their pocket money and give them a prepaid card.

GoHenry, for instance, targets kids from six to eighteen. The prepaid card functions similarly to a debit card, but it's simple to top up and you can see how they spend their money.

Another excellent teaching tool to help them understand how money works is a pre-paid card.

The cards can be customized with their name and their favorite pictures, which could include cars, football players, or adorable pets.

Although it is free for the first month, the account pricing starts at £3.99 per month.

Other prepaid cards that function similarly are Nimbl (32 annually) and RoosterMoney (19.99 annually).

If you intend to give these as a gift on Christmas Day, make sure you allow enough time for them to arrive.