Savings for DD - who do you agree with?

[StrangeOrJustInconsiderate]

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?

Person C. Me. Put all the child benefit and whatever you can afford in a savings account. Don't tell DD.

When she turns 17 she gets a car. At 18, 19, 20 its used for a house deposit or a second property that you can rent to her. You keep the rest saved for things like her wedding, university fees, big trips abroad etc.

That way it's all used for sensible things, not frittered away.

Also, the savings can be dipped into for any major change of circumstances or emergency that you and DH have in the future. Eg) major illness, loss of job etc.

@DingleyDells
Any savings account can be in 'Parent's Name as Trustee for Child's Name' so you are the one who has access to it, not the child. Once they turn 18 you are the one who decides where the money goes, not the child.

Where are you getting this information from, as it contradicts everything I have ever read? I agree that any savings account can be in 'Parent's Name as Trustee for Child's Name' up until the age of 18, but at that point the child/young adult becomes the beneficary owner and banks/institutions will no longer deal with the parent.
This happened in my own experience when my eldest turned 18.

Person A but save it in a way you have control over when they get it.
I spunked away 5k at 18 in no time, would have been able to use that money sensibly many times over since

I don’t have any significant money in dcs names. They have bank accounts that their pocket money goes into plus any extra they get as gifts. They usually get something from one set of gps at Christmas and something from the other at the beginning of summer. It’s not large amounts.
We have general savings but we just don’t have the sort of lifestyle where we could have looked at ds1 at 8 weeks old and decided we had a set amount we could spare to save especially for him. He is 16 now and our savings have funded my uni course when I switched careers and dh’s business expansion as well as unexpected things we can’t just absorb such as boiler repairs and new gearboxes etc. We’ll have 27 years from dc1 being born to dc3 turning 21. It’s a bloody long time.
My plan is to do what my parents did. Save for ourselves and fund education, driving lessons, house moves and house purchases. My parents and ILs have both helped with gifts and loans and I don’t feel I would have been better off if the same amount had been gifted to me at 18. I’ve also seen far to many sensible young people make silly choices when they have the means to do it. Money is easy to fritter at any age and I know I would have spent it differently if I’d had it all at once at 18 than when I’ve needed it at 17, 21, 26, 28, 34.......46 etc.

Not read tft but bear in mind that anything you do for dc1 you will also need to do for any future dc. So you might be able to afford £100/month now but can you afford 2 or 300? If it is in you name you can split it between all dcs.

Can I ask if any of the people saying 'tie it up in a trust until say 25' have ACTUALLY done this, and if so, where is the money invested and how is it managed?

Our experience is that to do this requires the setting up of a somewhat complex and expensive (in fees) discretionary trust which needs to be managed by multiple trustees, registered with HMRC and pay tax at a higher rate.

B.

Save the child benefit in the child's name. And add birthday money from relatives as and when. I would stipulate that it can only be used for Uni or savings to build on themselves for a house deposit. I'm a firm believer that kids need to learn to save for themselves - not have it given to them on a plate.

I certainly wouldn't let them have it at 18 for travelling - it would be gone in a flash. You could open up another separate account for them to put pocket money in and later when they are older they could save money from part time jobs for goals like that.

Then save any spare money you have in your name.

My dad has done this for ds and my db's children (who are much younger than ds). I don't know the details of the vehicle, except that dad has said that it has been set up in a way that allows him access to them, should he need the cash. I think that there is a management fee though.

I'm sure dad said ds gets access to it at 25, but it might be 23. Anyway, ds doesn't even know it exists, so can't make plans to fritter it away not that I think he would as he's pretty sensible with his money, which he now has to manage for himself as he's away at Uni

TeenTimesTwo

You're both wrong. Save in your own name.

You have no idea what your sweet 8 week old will be like at 18. Suddenly getting access to a big pot of money could give her the means to really screw herself up
I completely agree!

If you can afford to, then A.

Halifax does a children’s account at 6% interest with max monthly savings of £100. It is worth looking into whatever you decide.

I found DDs NSI bonds and Child Trust Fund have been nowhere near as good as the savings in her Halifax account.

I was just coming on to say 'Save it in your own names' too.

You don't know what the future holds, how many kids you might end up having, whether you'll both be in employment in the future or god forbid injured and unable to work.

If you keep it in your own names you can help your DC out in the future with no worries.

Lots of people here seem to think you either have to save in the child's name and they suddenly get instant access to loads of money at 18 or in your own name to regain control of it.

I have saved in DS’s name all his life to take advantage of tax free accounts but still have access to the pot, despite him turning 18 this year. He knows I have money put by for him but has no idea how much and certainly didn’t expect it to be handed to him on his birthday. Unlike some of his mates who have had everything given to them on a plate (driving lessons, cars with all petrol paid for) he has earned his own money and learnt to save up for things he really wants.

The money put by in his name will be used at some point in the future for help at university or maybe a house deposit or as and when he needs it for something in particular. There is absolutely no doubt he will get it all eventually but, just as I would if I had saved it in my own name, it will be nice to be able to have money put by to help him later on.

Person B- if you save any extra (in your name), you can always use it later for their benefit- tuition fees, helping with rent while they are a student, house deposit etc but you retain some control rather than risking an 18 year old blowing it all on clothes and alcohol. It also gives you the flexibility of having a bigger buffer if you ever need it.

It's also worth bearing in mind that you need to be able to do the same for future children, who will also get lower child benefit amounts- it would be unfair for DC1 to benefit from you having more cash now while DC2 gets significantly less.

You save what you can when you can into a separate account: who knows what the futire holds: university, adolescent mh care, cars, flats, weddings.

Our dc are 21 and 24 now. We had no idea all those years ago what money might be required for. Just that it might be required and where possible some needed to be put aside.

She's 8 weeks old. Enjoy your baby, be sensible and see what the future holds.

”The money put by in his name will be used at some point in the future for help at university or maybe a house deposit or as and when he needs it for something in particular.”

But if he’s an adult and it’s in his name, on what basis are you withholding it?

DS has an isa and any money he receives from birthdays Christmas etc are put in there along with a small (£10) amount from me a month and £10 a month from DH. He cannot touch this money till he is 21. The child benefit we receive for him goes into my account and we put it towards things he may need. Nappies etc when he was younger and clothes/toys now he is a bit older

We didn't save anything specifically for DS, we did have our savings and used those towards university costs and will no doubt help further if we feel it is needed for house buying etc, the choice is ours.

A friends DS turned into a right criminal, you just never know, it can happen to anyone, imagine them having access to a large amount of savings at 18 for who knows what.

I would go a totally different approach.

I am highly unimpressed with an ideal to save a significant am Unit for 18 years and just handing this over.

We have savings accounts for DD, one has been opened in her name and got a lump sum from both grandparents plus both pay in, one on a regular basis, the other several times a year lump sums. That money is designed to be handed over but is still in our control (different country, children accounts can be accessed by the parent until the child is 28).

We have a savings account in our name. We pay in each months, the amount saved depends on a lot of scenarios, the extra money we had, later what we saved when the funded nursery hours came in, raise in income etc,

The money is primarily designed for DD but can be accessed for significant expenses like school trips or holidays or her room make over, driving licence/car. Things which go above the normal things parents buy.

While I am extremely grateful myself that my parents saved for me and did a mixture of lump sum and paying towards bigger things like driving licence and a big holiday I think giving up all kind of control over the money is wrong.

In your circumstances i would save some money into an isa if you really want and then do other savings where funds can be accessed and the amount you want to save can vary depending on circumstances.

@flowery On the basis that it’s not his money, it is my money that I earned and went without other things to put by for him, just as it would be it it were in any account in my name instead.

It becomes his money when I gift it to him as and when he needs it. He knows there is some money and i have told him very clearly that if there is something he needs, he must come to me first before taking on debt.

DS is well aware of the set-up and happy with it. He certainly doesn’t see it as money that he is entitled to just because I chose to save money for him in an account in his name so that he ends up with more than he would have had it been in mine (due to the better interest rates available and tax exemption).

Neither of those, I'd either spend it now on them or have an account in my name and the money goes in that. Then when they want something they can have it.

Personally I wouldn't give an 18 year old a big lump sum,all the people I knew at that age would blow the lot on partying, drink and drugs, cigs, holidays etc.

”On the basis that it’s not his money, it is my money”

I meant on what legal basis, not what moral basis.

Haha @flowery Yes, if he decides to take me to court to access the money he will win.

Luckily I haven’t raised an entitled twat who would do that though

Every single person I know who inherited a lump sum at 18had spunked it by 20. Some made pretty bad short term decisions on the basis of their anticipated inheritance too.

I'd save it til they were 24. And not tell them it was coming.

MuttsNutts Are you certain that the bank will let you have access to the money now he’s 18? It sounds an unusual arrangement.