Child Trust Funds (CTFs) form part of the government's plans to ensure Britain's youngsters will have savings to help them start their adult life.

A CTF is a long-term savings and investment account designed for children in the UK and it is hoped that these funds will help teach youngsters about savings and help amend the ‘spend now’ culture adopted by their parents.

The government also expects that the CTF scheme will help children gain a better awareness of personal finance management in general.

It hopes that a radical change will be made in the money management of future Brits if parents make adequate use of it.

Any children living in the UK and receiving Child Benefit who were born on or after September 1st 2002 have been given a CTF account, which has an initial subscription from the government in the form of a voucher, which is valued at £250.

The money invested does not belong to the parent, but the child. However, eager children cannot get their hands on their investment until their 18th birthday.

Types of CTF include stakeholder accounts, savings accounts and non-stakeholder accounts, however most experts advise equity-based CTFs.

The stakeholder account invests in shares and there are certain rules imposed on them to reduce risk, such as a facility for moving money in the account gradually to lower risk investments or assets when the child turns 18.

Any additional deposits can be made by relatives such as parents or grandparents, or the children themselves.

Unlike the other kinds of CTF, there is a 1.5 per cent cap on the charge on the stakeholder account.

Savings account CTFs function in the same way as a bank deposit account, so there is a rate of interest and the nominal amount of the funds is secure.

Finally, non-stakeholder accounts invest funds depending on the type of product and are not protected by the same standards as stakeholder accounts.

Britannia Building Society is a provider which offers two types of CTF – a stakeholder account and a non-stakeholder savings account.

The government's generosity does not stop here, however, as it is in talks to introduce a further voucher when a child is seven-years-old and is also seeking consultation on whether an additional voucher should be given to a child once they reach the age of 11.

Despite the government's efforts, many parents are failing to invest their vouchers before the 12-month deadline, which has led to calls for parents to take action quickly to get the most out of the scheme.

Phil Stubbins, savings and investment manager at Britannia, said: "It's crucial parents or guardians invest their vouchers to turn them into cash for their k ids and if they don't take any action, the government will invest it for them, thereby effectively removing their choice of financial provider."

It seems that the government's attempts to ameliorate the savings culture and personal finance management among young Britons is something to be commended and hopefully parents will take action to ensure they invest their vouchers for the benefit of their children.