Three quarters (76%) of parents and guardians with children aged under 18 are saving or investing for their children, NatWest found.
Out of this, more than four-fifths of parents are doing so exclusively in cash rather than investing, a survey has found.
While this is good news for the kids who will be helped out with a savings pot, experts say that there are better ways to build financial security for children.
Together with advice from NatWest and Money.co.uk we have put together a list of 5 savings options for children that will allow them to get the hang of banks and money and give parents peace of mind.
83% of parents are saving exclusively in cash, meaning their money may not be growing as much as it would in a bank.
Add to this the fact living costs will potentially increase, our savings pots will be worth less money in the future.
Peter Flavel, CEO of Coutts and NatWest's wealth businesses, said: "It's encouraging to see how many people are saving and investing for their children, but with so much of these savings being cash, the concern is that the customer isn't aware that the impact of inflation means the purchasing power of these 'safe' cash balances actually goes backwards over the longer term."
With investments, people may find that their money grows more over the longer term than if they had left their savings in cash.
Parents could potentially save into a stocks and shares Junior Isa.
However, the value of investments can go down as well as up, so savers should also bear in mind the risks of potentially losing some money, if investments do not perform as well as they hope.
The NatWest data also revealed that nearly a fifth (18%) of UK parents or guardians who are saving for their child are doing so by putting away cash in their own bank account, rather than one specifically for a child.
Often, children's savings accounts will have higher rates than adults' savings accounts.
Nearly half (48%) of people who were not saving for their child said they could not afford to.
But nearly one in 10 (8%) did not know where to turn to for advice.
Mr Flavel continued: "The wealth industry must do more to educate customers and society about the benefits of investing, and also deliver low-cost and more flexible products to help people grow their savings."
Two thirds (66%) of parents and guardians surveyed believe financial education should be part of community-led and paid-for baby services.
More than 2,000 parents with children aged under 18 were surveyed.
5 ways to save money for children
Money.co.uk say that while there is no one best formula to follow, there are a number of ways you can choose from that fit your financial goals.
Instant Access
Instant access savings accounts let you pay money in and take it out whenever you want, but do not usually offer very competitive interest rates.
If you think you will need access to your child's savings then an instant access savings account could suit your needs.
Regular Savings
Regular savings accounts let you save on a regular basis and they usually allow you to pay around £100 per month.
This option has much higher interest rates and will give you instant access to your savings.
Fixed-term savings or bonds
You can take advantage of higher rates by locking your child's savings away for up to 5 years.
To do this you have to be prepared to leave the funds until the end of the term as you cannot make withdrawals without big interest penalties.
Junior Isa
You can save into a tax-free Junior ISA on behalf of your child.
You can pay up to the Junior ISA allowance which is £9,000 in the 2020/21 tax year, and add more money in each new tax year.
These accounts usually pay a high-interest rate and let you deposit money when it suits you.
When your child reaches 18 years old the account converts into an instant access ISA in their name.
Stocks and shares
You can invest in the stock market on behalf of your child through investment products, such as a young person's savings plan or a stocks and shares Juniors ISA.
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