Active discussions

Meet the Other Phone. Flexible and made to last.

Meet the Other Phone.
Flexible and made to last.

Buy now

Please or to access all these features

Talk
AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

In thinking that putting significant money in a child trust fund or similar is a bad idea?

50 replies

DoodlePug · 27/09/2022 13:40

I have a friend (pretty average income) who puts pretty large sums of money into her kids CTFs. Basically all of their child benefit (one if those people who believes it is the child's money) plus other sums she's saving for their future. And I know several other people who do similar.

The idea is that it'll be a nice pot of money that can be used to help pay for uni or a house deposit.

I have in the past pointed out that it's the kids cash once they reach 18 and they could blow it on crap/motorbikes/drugs /travel and then still need help with university costs or buying a home. Will she say 'no, you've had the money?'

The general response to this was 'Well, if they're going that way I just won't tell them about it' but that was blown out of the water a few years back when the first CTFs matured and there were ads everywhere telling 18 year olds how to find their lost accounts.

Obvs this is none of my business and I would only bring it up during a conversation in this area. But AIBU to say anything at all? Does it cast aspersions on my friends darling children or is it more likely just something they've never considered and a useful challenge?

OP posts:
Fuuuuuckit · 27/09/2022 13:47

My ds had about £5k in his. Blew it on a car and a year's insurance. Fuck knows how he's going to pay for this year's insurance.

He's got a chunk of inheritance coming his way soon (left to me but it was my dad's wish that the gc had some, no will) but its going in my name.

GasPanic · 27/09/2022 13:50

It's a bit stupid if you can't take it out in an emergency. Better off saving it in a more flexible account and then transferring the money when the child comes of age if you find it is not needed.

It would be interesting to know how it gets counted in terms of assets for benefits etc.

Chdjdn · 27/09/2022 13:51

I’ve thought about this and I’d rather save money for them in an account of my own as I don’t want them blowing the money when I’ve saved hard for it and it’s supposed to be for university, cars, a house etc

luxxlisbon · 27/09/2022 13:52

Everyone is entitled to their own decision. Maybe they trust their parenting that their child will be sensible with it? Not all 18 year olds are irresponsible.

The downside to it being in the parents name is the interest available. Savings aimed at children which are locked away until they are 18 usually have a significantly better interest rate which obviously over almost 2 decades can have a huge impact.

This isn’t really any of your business.

TheTurn0fTheScrew · 27/09/2022 13:59

Yeah, agree.
It might be different if you're minted, but I prefer to keep savings flexible. Ideally the DC will be able to enjoy our savings for university/early career support, but I'd feel like a right idiot if for example I needed to replace the roof and couldn't afford to while the had £££ locked away in their names.

And yes, although I'd happily pay rental deposits/first car insurance or whatever, I wouldn't be confident just handing a wodge of cash to any 18yo however outwardly sensible they appear.

GiantTortoise · 27/09/2022 14:03

I agree OP. My DC have small amounts in CTFs and I think they'll be great for a few extra £ when they start uni or whatever, but I wouldn't stick loads of additional money in them. I know three people, all generally sensible, who had access to a lump sum at that age (from different sources) and wasted it.

pbdr · 27/09/2022 14:07

I save £100/ month in a S&S JISA for my daughter (she's only 11 months old) from birth, and intend to continue doing so until she is 18. At average rates of growth this would work out at about ~30k in today's money by her 18th birthday. I want her to learn how to invest and manage money, and in Scotland she will take over control of the account at 16 but not be able to withdraw until 18. I figured that it is more difficult to learn how to manage money without having any money to manage. I am perfectly aware that she could blow it all on anything when she is 18, but if she does then hopefully there will be a learning opportunity there about how quickly money disappears when you are frivolous with it and how it feels for it all to be gone with nothing to show for it.

I plan to pay for university/first car/ driving lessons and help with house deposit separately, although I'm not planning on telling her that until the time comes as I don't want that to influence what she chooses to do with her ISA.

BreakfastGold · 27/09/2022 14:12

My child's patenal grandparents have done this, and it's quite a lot of money. I'm really torn because on one hand I'm grateful they're giving her a start in life, but on the other, I feel a lot of pressure to get her to become sensible with money by the time she is 18. It does feel risky.

LosingTheWill2022 · 27/09/2022 14:21

I put nothing extra into the CTF. It's all dd's and she can do what she wants with it when she's 18.
I have been saving in my own name but 'for her' so have funds set by for the longer term.

ThreeRingCircus · 27/09/2022 14:23

The benefit of it being in the child's name is that it is separate from your finances. If you went bankrupt, or had to claim benefits then that money is theirs and cannot be counted as part of your assets. Personally however I think that the risk of my DC blowing all the money at age 18 is greater than the risk of me going bankrupt so the only savings in their accounts is any birthday or Christmas money they've been given over the years, it'll probably be about £2k each by the time they're 18. That's plenty enough for them to burn through if that's what they decide to do. I was given a few thousand pounds when I was 17 by my grandad and I completely understand wasted it.

I do save for my DC in a S&S ISA in my name but don't plan to tell them anything about it. The intention is to use it to help with house deposits in the future.

MrsTimRiggins · 27/09/2022 14:26

It’s up to her really isn’t it? I mean, I can see your point (altho I think you’re weird including travelling as a ‘pointless’ expense…) and they may waste it but I guess there’s a life lesson there for them if nothing else.

milawops · 27/09/2022 14:33

I put money into a kids saver for each of my 2. No way would I put it into a junior ISA and have it become theirs at 18. Purely because I know exactly what I would have done if I had found out I had access to a lump of money at 18. I hope they will be more sensible than I was but until I know for sure they won't have any knowledge that it's there let alone access to it.

MacaroniBaloney · 27/09/2022 14:38

I'm with your friend. My DC have 22k each from their s&s CTF and still have approx 8 years still to go.

I'll post back once they're 18 to let you know if they've blown it on drugs and strippers or used as a house deposit.

Inkyblue123 · 27/09/2022 14:43

im Glad you mentioned this - I’m saving a couple of quid for my DD. And I’ve no idea where to put it. I don’t like the idea of just handing over a big wedge of cash the minute she turns 18. Savings accounts are no good - they are not even keeping up with inflation . I’ve no idea where to put the money!

TheClogLady · 27/09/2022 14:44

The government Child Trust Funds have been causing a bit of trouble in my little part of the parenting support world - I know of at least two teens who have immediately booked double mastectomy top surgeries as soon as they got their hands on the cash (both travelling to European countries to use surgeons who don’t have the psychologist referral requirements that exist in the UK).

it’s lovely to save for your kids but keeping it somewhere where you can drip feed it to them until their frontal cortex develops seems a wise idea - the government trust fund scheme doesn’t allow for that!

lanthanum · 27/09/2022 14:48

ILs have put substantial amount into DD's - it's sensible inheritance planning for them. Fortunately, she is a very sensible kid with few wants, and I suspect she won't touch it until she's graduated, probably not until she needs a house deposit. But the potential for kids to spend it all immediately on cars/botox/drugs/travel is there.

lanthanum · 27/09/2022 14:51

TheClogLady · 27/09/2022 14:44

The government Child Trust Funds have been causing a bit of trouble in my little part of the parenting support world - I know of at least two teens who have immediately booked double mastectomy top surgeries as soon as they got their hands on the cash (both travelling to European countries to use surgeons who don’t have the psychologist referral requirements that exist in the UK).

it’s lovely to save for your kids but keeping it somewhere where you can drip feed it to them until their frontal cortex develops seems a wise idea - the government trust fund scheme doesn’t allow for that!

Yes, I wondered whether to add gender reassignment into my list...

megletthesecond · 27/09/2022 14:52

Yanbu. 18 is too young.
You never know what state that 18yr old will be in.

Suzi888 · 27/09/2022 14:54

We save for DD, she will never know about it and it’s not ‘her money’. If she expresses a desire to buy a house, it will be gifted to her at that point.

She won’t be given it when she’s 18. If someone had given me a huge sum of cash at 18 I’d have blown it all on travelling and a fancy car (and insurance).

skyeisthelimit · 27/09/2022 14:59

DD has an ok amount in her CTF. We saved a bit into it and at one time you could convert nectar vouchers to go into it. I also linked it to Kidstart so cashback goes into it, although I mostly use Top Cashback and use it for Christmas/Birthday presents.

I think the CTF now stands at around £2.5K after 14 years. It has earned around £800 over the years outside of what has actually been paid in. (I keep a spreadsheet tracking it all).

She also has £3.5K in savings accumulated since birth and I have put that into Premium Bonds and invest £25 a month into there for her.

When she is 18 it will all be hers legally, so it is up to her to spend it wisely on a car or uni etc. If she doesn't then so be it. I am bringing her up to know that you can only spend it once and that it is better to save than get into debt so hopefully those morals will stay with her.

SuzySangfroid · 27/09/2022 15:04

I think it's up the parents (sorry, does that sound really "your bubz your rulz babes")?

We put little bits money away for ours in JISAs. If they blow it at 18, then that's up to them really. We will only give it to them once and we'll make that clear.

We wouldn't fall into poverty for it either. If we can't afford it at any point in the future, we will stop paying into it. We do it with any money we have spare

Original poster
DoodlePug · 27/09/2022 15:05

MrsTimRiggins · 27/09/2022 14:26

It’s up to her really isn’t it? I mean, I can see your point (altho I think you’re weird including travelling as a ‘pointless’ expense…) and they may waste it but I guess there’s a life lesson there for them if nothing else.

Ha, I put in travel on the list (but did not say it was pointless!) because the kids could indeed use it for a purpose you'd approve of but then they've spent their house/uni fund on travel, would you have guven them that money to travel with?

OP posts:
BonesOfWhatYouBelieve · 27/09/2022 15:07

I agree, but it's obviously up to other people what they do.
Having a significant amount of money in an account I couldn't access in an emergency would make me more nervous than having it earmarked for DC but still accessible by me if it came to it.

TightDiamondShoes · 27/09/2022 15:08

My children both have ones significant enough to buy a flat for uni. The youngest I will never, ever tell - the eldest is autistic and was freaking out about the rent at uni… so I told him and he’s not mentioned it since.

the youngest would be presenting me with a list including, but not limited to: motorbike, jet ski, massive party, booze, drugs, taking his friends to malia… 🙄

PigsInBlanketyBlankets · 27/09/2022 15:22

You won't need to tell him @TightDiamondShoes

As soon as he nears 18 his social media settings will see him targeted by ads telling him it exists. That's the point.