Successive governments have tried to persuade us that saving, whether for our pensions, that rainy day or for our children’s future, is a good thing.

Saving for children has been a particularly thorny issue and people have come up with various ideas on how to address the issue. The most recent effort was Child Trust Funds (CTFs), where the Government handed out hundreds of pounds to the parents of every newborn with the idea of encouraging them to start a savings habit that would last a lifetime and help to fund their university education, a house deposit or similar.

In 2011, it’s time for the CTFs to stand aside, as there’s a new kid on the block: the Junior ISA.

But what is it, who can get one and how does it work? Your Money reveals (almost) all.

In basic terms, the Junior Individual Savings Account (JISA) which was launched last week, allows relatives and friends to invest for the under-18s tax free. All children are eligible for a JISA if they were either born on after January 3 2011, born before September 2002 and are under 18, or born between those two dates and don’t have a Child Trust Fund.

Like an adult ISA, a JISA can be a mix of cash, shares and investment funds. However, unlike the adult version, investments in the JISA are locked in until the child’s 18th birthday. Once the child is 18, they can either take the money out and spend it however they choose, or potentially put into another tax free investment such as an adult ISA.

The limit on a JISA is £3,600 per year, every year. Like an adult ISA, if the allowance isn’t used in the year it’s lost – and you can either keep the whole lot in cash or have a mix of cash, shares etc.

And you don’t have to choose your investment immediately. There is the option to hold the allocation in a ‘cash park’ on an investment platform while you decide what to do with it. This is particularly useful for those people who realise at 11.30pm on April 4 that they haven’t yet spent their allowance.

Unlike an adult ISA, however, parents will only be able to have one provider at a time for their investment JISA and one for their cash JISA. In other words, you can’t have acquired cash JISAs with 18 different banks or building societies by the time Johnny turns 18.

Although naturally the earlier children start the better, provided the child is under 18 parents can start a Junior ISA on their behalf whenever they like. Once the child reaches 16, they can start their own.

As with all investments, it’s worth shopping around, although in the short term you may have trouble finding someone who offers the cash product. A few fund management companies are offering investment products and any stockbroker will be able to find a range of funds.

One very important thing to note is that if your child already has a CTF, then they can’t have a JISA too. This has caused some consternation amongst parents who fear that CTFs will become unwanted and unloved.

In an effort to assuage these fears, the Government has raised the investment limits on CTFs to those of JISAs (£3,600 pa) but it will be interesting to see how rates of JISAs and CTFs compare in the years to come.

It’s also impossible, at least at the moment, to move a CTF into a JISA, although this may change in the future.

Another salient difference between the JISA and the CTF is that this time there is no Government handout to get parents started. All the money has to come from your own pocket.