The 250 hand-out, payable to the parents of 350,000 children aged under six, will arrive each quarter from now on, with two more payments of 250 each due before the end of the year, one in October and the other in December.

The early childcare supplement, which will be worth 1,000 per child in a full year, is the government's response to the flak it is taking from parents struggling with the crippling costs of creche and other child-minding options.

Although welcome, the money can do little more than dent the huge costs that comes with parenthood. According to figures compiled by the Labour Party, the cost of sending a child back to primary school in two weeks' time ranges between 720 and 823, depending on uniform.

That would gobble up most of the childcare supplement in one go, leaving little to cover all the other costs involved in bringing up baby.

But for families who have managed to shoulder these costs from their own resources to this point, the early childcare supplement gives a real chance to put something aside for the future. In an individual year, the money might not look like a lot. But saved over time it can add up to a tidy sum, especially as returns are compounded year by year.

You could stretch your savings even further by throwing child benefit payments into the pot. This payment went up to 150 per child per month from April, with the figure rising to 185 a month for third and subsequent children.

Taken together, the childcare supplement and child benefit amount to a tax-free payment per child of 2,800 a year, or more than 50 a week.

According to figures compiled by Quinn Life, which sells low-cost savings plans, the family that invests all of the money could be sitting on a nest egg worth a projected 60,000 after tax and charges by the time each child turns 18.

Investing the child benefit only would yield a projected pot of just under 50,000 by age 18.

On the other hand, you could spend the monthly child benefit and save only the quarterly childcare supplement payable until the child turns six. If this were invested, and stayed invested, this would be worth a projected 11,000 by the time the child turned 18.

Luckily, there has never been a better time to set up a regular savings plan. As more SSIAs mature month by month, the banks are offering sweet deals to keep us saving after the government withdraws the 1 for 4 monthly top-up.

AIB and Anglo Irish Bank have the best headline rates for depositors and, following the latest interest rate hike by the European Central Bank, both are offering a 5.5% return for people who save month by month.

But while the rates may be identical, there are important differences in the way the accounts work.

AIB only allows you put away a maximum of 300 each month, in return for which you will be paid a juicy margin of 2.5% over ECB until the end of next year. Anglo Irish Bank allows you save up to 1,000 a month, but has more terms and conditions. It locks you in to a two-year savings plan and, while you can access your money during this time, you will suffer an interest penalty for doing so.

Bank of Scotland (Ireland) is another option, especially if you have already accumulated a lump sum before starting your savings plan. It is the only bank that accepts an existing pot of money up-front while still paying a decent rate of interest, currently 4.5%, on subsequent savings of up to 750 a month.

Bank of Ireland also pays 4.5% for regular savings of up to 1,000 a month. While it does not accept lump sums like Bank of Scotland, it has the advantage of flexibility, allowing you to save weekly, fortnightly or monthly, to skip contributions, or access your savings without penalty.

While deposit rates are creeping upwards at all banks, so too is inflation, touching a worryingly high 4.2% in the year to July. After Dirt tax is deducted, this means your savings will struggle to keep pace with the rising cost of living.

The drag of inflation is especially acute if you plan saving over the long term . . . until children are 18 years of age, for example.

To give yourself a fighting chance of marking real returns, you will have to take some risk by investing your savings in the stock markets.

While this means greater volatility, study after study has confirmed that the stock market is the best long-term home for your money.

Just like the banks are offering good deals on deposits, their insurance arms have rolled out a string of SSIA follow-on products aimed at regular investors.

Bank of Ireland Life even promises to continue the 25% SSIA top-up for another six months, funding the contribution itself, after the government scheme comes to an end.

The only catch is that you must continue saving for another three years or you will lose the bonus.

If you start off with a lump sum of 10,000 and save 250 a month for five years, Bank of Ireland projects that you will have accumulated a nest egg of almost 28,000 after five years, having been boosted by its sixmonth bonus.

But like all investment-based savings plans, it is important to keep an eye on the underlying fees and charges. According to the competition, Bank of Ireland's generosity is not all it seems because it can easily claw back its up-front bonus through pricey charges, including an entry cost of 2.75% on each monthly contribution plus an annual 1.5% of the value of the fund.

By investing in a fund such as Quinn Life is offering, with no up-front charges and a lower annual charge of 1%, you could do a lot better . . . even though Quinn does not pay the type of bonuses offered by Bank of Ireland.

The same savings plan (lump sum of 10,000 and 250 a month saved for five years) taken out with Quinn Life, for example, would have a projected value of almost 30,000 after five years, 2,000 more than you would get from Bank of Ireland.

Of course, there are no guarantees that Quinn's cheap and cheerful funds will perform as well as companies that take a more sophisticated approach to investment management. But then again, Bank of Ireland cannot guarantee that its higher charges will bring better fund performance.