What's the best way to put money aside for your children?

[umenoc]

Hi everyone!
I have a toddler who's 1 year 1/2 and I thought of creating a saving account for him and putting 50 pounds in it every month. This way he would have 10 800 pounds in 18 years - a potential deposit for a house.

Is there any way to create a bank account for him with no possibility to withdraw money until he can do it himself at 18?

Also, is there any better/more optimal plan than what I want to do?

Thank you so much!

I did a savings isa with my bank for both of mine.
Not sure what age they can access it though... just wanted somewhere to put all the money people kept kindly giving for them.
Might have to move it at some point but it does for now.
Mine are only 2&3

Premium bonds? Could win something as well.

Thank you for your reply!

I would like to create an account in his name that neither me or his dad or anyone else could access, even if things are very tight. Does something like this exist?

We have junior S&S ISA's for our children which we put a small amount in, we can't withdraw the money so I don't want to have all their savings in there just in case we ever had to access the money (although clearly we don't plan to)

Any other savings go into premium bonds for them. They do quite often win £25 or £50 so it's proving to be quite a good return on investment so far

I will look into that, thank you so much!

There is a "Junior ISA" which transfers to the DC at age 18.

The advantage is that in the event of bankruptcy/divorce/other major life change, the money belongs to the DC and can't be touched.

The disadvantage is that if your DC turns out to be a feckless waster, there's no way to stop the money being transferred at age 18.

There are horror stories both ways round on MN!

Good idea. Don’t forget you might need uni fees too around age 18 which can add up

I would read the Premium Bonds thread on here quite closely before investing. There are people with full holdings who are considering withdrawing large chunks and putting it into savings accounts instead at the moment because interest rates are good for savings.
Admittedly someone does have to win each month, but as an example I've got around 1500 in Premium Bonds and have held them for around 10 years. In all that time I've won £25. My money would have earnt far more in a savings account, but a girl likes to dream!

Junior s&s ISA.
I opened one with vanguard it took less than an hour I think...

You can pick and change funds easily and super.low management fees

I save into an investment trust in my own name for him. I imagine he'll be a bit older than 18 before he gets hold of it though.

We did this for ds. I picked Halifax. They have a high interest children's savings account that you pay into every month so earn a good rate for a year and then it gets shuffled over to a standard interest savings account. It's in his name but can't remember when he can access it. Tbh you don't have to tell them you've set up a savings account for them!

I would never ever put money in an account an 18 year old could access, they're still children!

Just save it in your name

can you withdraw money from it?

That's what I'm thinking of doing. Not telling him until he's a bit more mature.

That's certainly one point of view. My own DC have been sensible with their JISAs once they reached 18, taking small amounts out to supplement their student loans, and transferring the rest into a LISA as quickly as possible. It could all have gone horribly wrong. But an account "in their name" still legally belongs to the parent, and in the case of unexpected events might not end up reaching the DC. (One reason we chose the JISA was precisely to stop the temptation of raiding it if things got tight, and now we're glad we did that.)

@umenoc I believe once it's in the basic savings account then we can. It's all online these days! I'm currently debating putting some of what's in the savings account into a normal ISA in my name to hold for ds. Just for the tax free benefits and improved interest rates. I don't have lots in my own named and it's less tied up than in a children's ISA.

Benefit of JISAs is that any income ( interest, dividends etc) on the money is tax free forever once it’s in there so if they don’t touch the capital they have a tax free income stream. You get an annual allowance ( 9k as a kid, 20k as an adult) so it’s not an unlimited tax free savings route. Therefore worth using it.

Another option is to start investing in a pension for them. It might sound strange but the compound effect of putting away a little bit every month now while they are so young means they could have a very healthy pension pot to retire with in the future.

Some estimates say if you invest the max of £2,880 per year (which gets topped up to £3,600 by the tax man) until the child turns 18, that lump sum could compound into a pot of £750,000 by the time the child retires. Of course that is not guaranteed.

https://www.nerdwallet.com/uk/pensions/setting-up-a-child-pension/#:~:text=Even%20if%20you%20only%20save,you%20have%20already%20been%20paid.

I had never thought of that! thank you so much!

I have a Halifax regular saver for DS. I am trustee on it so I manage the account and he can't access it. Every year it matures into a Halifax kids saver. It's a good interest rate and I have online access so I can check the balance.