I currently save for my children on a monthly basis. They have sizeable sums in their accounts which are all money I have put in them. They are small children and have no awareness of the money.
It is my view that it is totally up to me what I do with that money. I can move it between accounts and different investments as I see fit, and I can choose to let it languish in an account paying 0.1% interest with inflation eroding it’s value, or out it in risky investments which could yield big. All the money has come from us, so if we ever needed to use it to pay for famiky things, I wouldn’t feel too bad about that. In my view, it is a sum which can increase or decrease over time due to market changes or family circumstances. It could grow lots if we do well and save more for them, or shrink if we need the money. The amount they finally receive will be what’s there when they are 18 and I expect to then guide them to save it for a hosue deposit, although I realise that if they choose to blow it, as it is theirs, I won’t have control of it after they are 18.
At one point, we took all the money out of the children’s accounts to use to help buy a house. We replaced it within 2 years. We were very happy with this.
I wouldn’t use for own purposes money which has been given by other people.
I guess, at this time, I see this as money which is to be USED for the best interests of the children. The best interests can take a variety of forms…..it could be to engage in high yield but risky investments, or safer low return investments, or for family investments like property which might yield later and benefit the children, or for food if that’s what the family need at the time. I guess ultimately, until the children are adults, I see it as an extension of our own adult money which is held in their name. So I have a sense of the value of it and want to keep it in dressing if possible, but it’s not a linear journey. We took £20k from the children’s accounts to buy a house. 2 years later we replaced it with £25k. It could be that we will sell the house we bought with the children’s money and then add more to their savings pot from the proceeds. So our decision could mean they have more in future. Or some if our decisions might mean we need to take some of the money and the value drops temporarily or in the longer term. It is a work in progress to see what we can accumulate as a famiky and for them until the point we hand it over.
If I had debt, I would use the children’s savings, especially if I had given the money, but even if I hadn’t. In all liklihood, the kids will be better off being in a debt free or low debt household, than having a few quid in the bank and being in a family struggling with debt. Parents are the custodians of their children’s money and have to do what seems best with it. Simply putting it in an account and never touching it, in many ways seems worse to me, than making it work….and there are many ways to make money ‘work’ for a family at the current time as needed, or with a view to its growth.