Industry estimates suggest that by 2021 one in three children will have no savings to fall back on when they reach 18.

This means that almost 4m young people will face financial problems when they enter adulthood because they have no money.

Research by the Building Societies Association indicates that future generations could find it impossible to buy a house or avoid debt.

So what can be done? Well, the government is encouraging parents to get their offspring into the savings habit from a very early age with Child Trust Funds. These tax-free investment vehicles were introduced for children born on or after 1 September 2002, and make an ideal starting point. The parents of each child get an initial £250 voucher when the child is born and a further £250 on their seventh birthday.

The vouchers can be invested in cash accounts or stakeholder funds, as well as non-stakeholder stockmarket-linked products, which offer a broader range of investment choices, in return for accepting a greater level of risk. The money can’t be taken out until the child reaches 18 – but by that stage it should be a very welcome tax-free nest egg for university costs or a car.

Apart from Child Trust Funds there are also plenty of basic savings accounts aimed at youngsters often with free opening gifts or regular offers. Not only will children get pleasure from seeing their savings grow, but they will also learn about money. This should help them to avoid unnecessary debt later in life.

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