Even if you don’t splash out on a Burberry jacket for your baby (£120 for the navy version) or the new Baby Dior Ski sunglasses (£70 a pair), bringing up children is an expensive business.

Here are some top tips about childrens' savings:

1. £250 baby bonus

If your child was born on or after September 1, 2002, you will receive a Child Trust Fund (CTF) voucher worth at least £250 from the Government. You can top this up to £1,200 each year and interest is tax-free. You could have earned almost 6 per cent growth since April by investing the voucher in the stakeholder CTF from Family Investments, managed by New Star. Information about CTFs is available on the government website at www.childtrustfund.gov.uk.

2. Take more risks

Whether you are investing in or outside a CTF, shares should give a better return than cash accounts over a period of more than ten years. The Association of Investment Trust Companies calculates that saving £50 a month in the average investment trust over the past 18 years would have produced £19,925. The same amount saved in a high-interest building society account would have produced £16,492.

3. Don’t be fooled by labels

Most children’s investment products are simply repackaged adult accounts that allow you to make smaller monthly contributions. For example, the Jump account for children invests in the Witan Investment Trust. The minimum initial investment is £100 and the minimum contribution, monthly or quarterly, is £25. Similar funds are offered by F&C and Baillie Gifford.

4. School fees plans can be expensive

Schools may offer their own schemes but check what happens to money paid in advance if the child does not go to the chosen school. Many commercial school fee plans are re-packaged endowment policies, which are designed to mature when the fees need to be paid or at the end of ten years. These can have high charges. A unit trust or investment trust is cheaper.

5. Children’s accounts pay off

If you are risk-averse and want to stick to cash savings, choose a bank or building society account that is aimed at children. These often pay higher rates than those for adults.

6. A little goes a long way

Putting away just £30 a month for 18 years at an interest rate of 5 per cent will build a nest egg of £10,550 — useful for university fees or a house deposit.

7. Check the small print

Regular savings accounts can pay the best rates, but if you miss a payment you will be penalised. Halifax pays 10 per cent but you must make 12 payments a year or lose interest.

8. Children don’t pay tax

Children have their own annual personal tax allowance (now £4,895). When opening an account, register your child as a non-taxpayer. If the bank or building society does not do this for you, obtain form R85 from HM Revenue & Customs. If money given by a parent earns interest of more than £100 a year, this is treated as part of that parent’s taxable income. More information is available from the Revenue helpline (0845 9800645) or at www.hmrc.gov.uk.

9. Generosity pays

There are tax advantages for parents setting up accounts for their offspring. They can give a gift of £3,000 a year to each child free of inheritance tax. Grandparents can give £2,500. The allowance can be carried forward to the next year.

10. It’s not your money

Once an account or fund is in a child’s name, it is the child’s money. You can set up a “bare trust” to ring-fence investments. Parents can be trustees, but once the trust is established it cannot be revoked. The child can spend the money after turning 18.