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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Savings for DD - who do you agree with?

253 replies

StrangeOrJustInconsiderate · 04/08/2019 13:08

Name changed!

DH and I are currently in the middle of a disagreement re: savings for DD who is 8 weeks old.

We have already agreed that any child benefit we may receive (unsure if we qualify at the moment) will go into a savings account for DD. However we are disagreeing over whether to top it up each month or not and if so what amount.

Person A thinks we should add an extra £100 per month we can afford this and it will have no real impact on our current lifestyles. Our child will be living in a different world when they are older and any extra help cannot go a miss, they also think we would be able to control / help what an 18 year old spends the money on.

Person B thinks that with any child benefit plus the amounts we and others will put in at special occasions (we are not assuming this is already my mothers plan) there isn’t a need to top it up. Neither of us had a savings account for when we turned 18 and we’ve done just fine. They are also concerned about handing over a large sum to an 18 year old is a recipe for disaster. Person B also says if we do top up it should be a max of £10 per week.

Who do you agree with?

OP posts:
Surfskatefamily · 04/08/2019 14:19

Person B. I think the top up of £100 could go into a saving account of yours for costs relating to your child.
That's how I would do it. If it's not spent by the time their 18 then there's always firstcar/ first home/ uni costs to help out with

StroppyWoman · 04/08/2019 14:20

Option A.

When you are able to do it, always save.

Reallybadidea · 04/08/2019 14:23

We don't save any money specifically for the children, we just save whatever we can generally and then will distribute as we see fit when they're older.

YorkshirePuddingsGreatestFan · 04/08/2019 14:24

I saved for mine and they were given a lump sum on their 18th birthdays. It was stressed that the money was to be used on sensible things like uni costs, driving lessons, homewares etc. It definitely wasn't to be pissed up the wall in Ayia Napa or something like that!

To be fair they have used it sensibly. One has used some of it to help with his uni costs. He's doing computing and needed a decent PC. The other one is 20 now and hasn't touched it at all yet as he's keeping it to go towards a house deposit.

cushioncovers · 04/08/2019 14:25

Person A and if it becomes too much, cut back on how much you top it up by.

How did you both feel not having any savings given to you when you were 18?

I didn't get anything and could have really done with a bit of financial help getting my first car etc so I made sure I saved a small amount each month for my two dc so that when they turned 18 they had a small lump sum of just over a thousand pounds each to put towards their first car.

sophiestew · 04/08/2019 14:26

Sophie - if they couldn’t get a mortgage then I’d worry about that when it happens . I wouldn’t not encourage them to save because they may or may not get a mortgage in 25/30 years time . That’s idiotic!

So it wasn't "end of" like you said in your original post? That's good Smile

IwantedtobeEmmaPeel · 04/08/2019 14:28

B. Save the £100 in your own accounts or ISAs then you will have funds for the whole family or emergencies. You can always help out your DC when they are 18, 21, 25 etc with driving lessons, car, deposit etc from your own savings as well as the money you have saved for her. You don't know what the future holds so save money in your own accounts so you have flexibility and security.

Pebbles574 · 04/08/2019 14:29

You should probably have a look at this thread which was around yesterday as there was a useful discussion about what to do when they turn 18.

I can't believe there's been no/ little discussion in this thread about the different benefits of saving in a child's account or in your own name. At the moment you'd be lucky to get 1.5% interest in your own adult account (ISA or savings) whereas children's accounts are as much as 3%. That could make a big difference of many thousands of pounds in compound interest over 18 years:
18 years @ 1.5% = £24,779
vs
18 years @ 3% = £28,594

While you will retain control if you save in your name, you will also put the money 'at risk' of:

  • being included in your own tax bill (if not a tax-free account)
  • 'filling up' your own tax-free savings accounts such as ISAs
  • being considered part of your assets/ estate in the event of bankruptcy/ divorce/death etc

Think carefully, whatever you do!

lyralalala · 04/08/2019 14:30

I'd save it all in your names.

Firstly that solves the conundrum of the 18yo getting a big lump sum when you've no idea what kind of 18yo they will be (or even if things like savings they have will be counted toward student finance in years to come).

Also it gives a safety back up if anything ever happens. There's not a hell of a lot of point having 3/4k in savings for a child then a parent dies, or becomes disabled and the family end up homeless, or sitting for weeks in the freezing because the boiler broke just after someone was made redundant.

If you can save child benefit then that's lovely, but it's money to benefit the child, not necessarily for the child so it should always be accessible to the parents imo so that if it's needed to benefit the child it can be.

Original poster
StrangeOrJustInconsiderate · 04/08/2019 14:30

Sorry, yes we have a mortgage but we already over pay on this and we also have two savings accounts as family money - one for holidays etc. And one for rainy days.

There has been some very useful advice on here and will be discussing options with DH. I am person A and I do think the idea of keeping it a secret separate account is a great idea and will see how DH responds.

OP posts:
Trickyteens · 04/08/2019 14:30

Person A , for sure.

Elphame · 04/08/2019 14:31

Start a pension fund for her - ha ha

Actually this isn't as stupid a suggestion as it was clearly meant to be.

You can put up to £2,880 into a suitable contract and the Govt will top it up to £3600. Free Govt money! The downside is that they won't be able to access it for years but it could build up to a very sizeable amount.

Definitely worth throwing into the mix for consideration.

wizzbitfartface · 04/08/2019 14:31

I got a lump sum from 2 trust funds that different family members had going for me. I wasted the lot on fags, booze, nights out and clothes. Completely regret it now. Other family members who recieved same money were a lot more sensible and spent it on driving lessons, new car, training course etc. You don't know who she's going to be when she's older, only time will tell. I wish my family had kept the money to one side and then given it to me when there was something specific I needed or wanted.

Dontfuckingsaycheese · 04/08/2019 14:32

I remember hearing on one of the money programs that if you start a pension fund for them now to 18 it will be enough for them when they retire 🙂

lawnmowingsucks · 04/08/2019 14:32

I agree with Person A but money to be handed over at age 25 not 18

And start a lifetime ISA/pension fund for DC as well

Pebbles574 · 04/08/2019 14:32

Sorry - the other thread is: www.mumsnet.com/Talk/legal_money_matters/3627573-if-you-have-savings-for-your-children

Mummyshark2019 · 04/08/2019 14:32

I have been saving into my account for my child since birth. All child benefit plus £200 a month. This is all under my control so don't have to pass it over at the age of 18. We have a child ISA which birthday, Xmas money goes into. This can be accessed by the child at 18, for use in first car etc. Plus we have a child sipp account which is basically a pension fund.

Abouttimemum · 04/08/2019 14:33

It depends if you can afford it afford it or afford it at the expense of holidays / days out / childhood memories etc etc. I’d put lifestyle first at the moment and put a smaller amount away. But yeah if you’ve got the money then do it.

We’re putting our son’s CB into my husband’s Lifetime ISA. Undecided on how much to top it up with as I’m not sure what we’ll be able to afford once we start paying for nursery, drop days at work etc etc. Will reassess in a year.

BigChocFrenzy · 04/08/2019 14:34

Start a pension for them
It will accumulate over time , even if you stop at 18

Too many people put off starting pensions because they can't afford it in their 20s, 30s .....
or prioritise buying a home, or discretionary spending such as holidays

speakout · 04/08/2019 14:34

Save in your own name . 18 year olds are often irresponsible with money.
You may see it as a Univeristy fund, they may choose to blow the lot on an eight week holiday for themselves and friends in Ibiza.

Becles · 04/08/2019 14:35

Another one saying start a pension fund for her - the compound interest will be a huge difference.

TuffersTickler · 04/08/2019 14:36

Just a note to say, do not give unequivocal control to an 18 year old to that lump sum. Generally teenagers/young adults are inexperienced when it comes to money management, and despite any conditions you put on the money, it may get pissed away.

Please save it in your own name, but with your DD in mind.

I agree with Person A btw - I do not know why any parent, where they could, wouldn't try and ease their child's passage in life. There will always be things to pay for - further education, first home etc, which not try to help provide some element of financial stability for them?!

Thamantha · 04/08/2019 14:36

I'm not sure i can offer much advice as my DC is only six months old.

However we opted for the same plan that A has proposed. Money is put into a junior ISA each month which has a better interest rate than an adult account. It is their money, we will never be able to access it (so no risk of dipping into it). They can access it when they turn 18. If they choose to spend it on a holiday or a wedding, or just getting very very drunk that will be their choice. I am hoping that being aware of that means that we will work hard to instill some financial sense in our DC, so that they have all the information they need to make a decision, unwise or otherwise.

Pebbles574 · 04/08/2019 14:36

while a lot of children's accounts are technically held in trust until they turn 18, we found that to set up a trust only giving them access at 21 or 25 was much harder and required much more legal management - including trustees and the trust being taxed at a different rate.

For those people saying 'in an account but with access only at 21 or 25' can you tell me how you did it - which bank?

NotWavingButMNing · 04/08/2019 14:39

We saved for both DC from birth. We taught them about saving and financial awareness. We didn't "hand it over" at 18 although they knew about it they were happy for us to manage it. DS 1 took control of his at 22 when he started work and has since added to it. DS2 is 21 and still a student so doesn't have the money as yet. Although legally it was all theirs at 18.