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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Kid/kids savings account

42 replies

Chickpea17 · 27/07/2023 18:47

Me and my husband had a savings account for our soon to be 5 year old daughter which we put money in every month and ever year my mum gets her a little present and also £50 which go straight into my daughters savings account.

Anyway was sat down talking to mum today about my daughter and the conversation came up that me and my husband have specific what she can spend the money when she older 25% on what ever she like and 75% and more practical stuff on university if she decides to go.

My mum was extremely upset and said the money is my daughters, and we don't have a say what she gets to spend it on when she older. Am I being unreasonable?

OP posts:
HollyBookBlue · 27/07/2023 19:05

What sort of savings account are you saving in? Is it in your name or DDs?

I think it's sensible to save for your DC's future eg house deposit, uni, car etc. To do that and prevent the DC spending it as they see fit when they're older, you'd need to save in your name and gift it later.

It sounds like your mum would like the money she gives to be used for fun. Which is not unreasonable from a grandma wanting to treat her granddaughter. Why not open a separate account for that money to allow your DD to spend as she wishes, it will teach her good lessons about budgeting and the value of money. You can teach her about saving, and she might well listen without you insisting on your 25/75% rule. And might well remove the need for you to provide pocket money for a while.

Probablygreen · 27/07/2023 19:08

I think there is a difference between the savings, which is what you are putting in for her, and the gifts, which is what her grandmother is giving her. Open a new account and let her use or save the money from her Gran as she wishes and keep the savings from you for when she’s older.

Original poster
Chickpea17 · 27/07/2023 19:19

HollyBookBlue · 27/07/2023 19:05

What sort of savings account are you saving in? Is it in your name or DDs?

I think it's sensible to save for your DC's future eg house deposit, uni, car etc. To do that and prevent the DC spending it as they see fit when they're older, you'd need to save in your name and gift it later.

It sounds like your mum would like the money she gives to be used for fun. Which is not unreasonable from a grandma wanting to treat her granddaughter. Why not open a separate account for that money to allow your DD to spend as she wishes, it will teach her good lessons about budgeting and the value of money. You can teach her about saving, and she might well listen without you insisting on your 25/75% rule. And might well remove the need for you to provide pocket money for a while.

It a Junior cash ISA.
Yes maybe it might be best to open another account that we can put the money in from family and friends, so she can spend on what she likes when she's old.

OP posts:
Original poster
Chickpea17 · 27/07/2023 19:21

HollyBookBlue · 27/07/2023 19:05

What sort of savings account are you saving in? Is it in your name or DDs?

I think it's sensible to save for your DC's future eg house deposit, uni, car etc. To do that and prevent the DC spending it as they see fit when they're older, you'd need to save in your name and gift it later.

It sounds like your mum would like the money she gives to be used for fun. Which is not unreasonable from a grandma wanting to treat her granddaughter. Why not open a separate account for that money to allow your DD to spend as she wishes, it will teach her good lessons about budgeting and the value of money. You can teach her about saving, and she might well listen without you insisting on your 25/75% rule. And might well remove the need for you to provide pocket money for a while.

If we save it in my name and gift it when she older won't she have ti pay tax on it?

OP posts:
Wenfy · 27/07/2023 19:22

Children can spend a junior cash isa on anything they want. Once they turn 18 the money is automatically turned over to them. If you want to maintain control over your gift you may want to save it in your name and give it to her later.

FatAgainItsLettuceTime · 27/07/2023 19:24

Generally junior cash IsA transfers automatically to your child at 18 whether you like it or not, whether they are responsible or not, so you may not have much say at all in how it's spent.

It's for this reason that I have a JISA that I put £25 a month into which will be DDs and hopefully she will spend well, then I have an ISA in my name that I put much more into every month that I plan to give to her as appropriate.

Original poster
Chickpea17 · 27/07/2023 19:25

Wenfy · 27/07/2023 19:22

Children can spend a junior cash isa on anything they want. Once they turn 18 the money is automatically turned over to them. If you want to maintain control over your gift you may want to save it in your name and give it to her later.

Won't she have to pay taxes if it's in my name and I gift it to her?

OP posts:
JumpInAndSwim · 27/07/2023 19:27

Yeah, if it's an ISA you have no say. The money is your DDs alone.

I won't get an ISA because of this. I have children's savings account for my two DC & the money is for them but will also be used for special big purchases like musical instruments/ trip to France/ specialist sports gear in the future.

You may want to consider a regular saver for the 75% if you want to keep control of the cash.

YallaYallaaa · 27/07/2023 19:30

If you’re a basic rate taxpayer you can get up to £1,000 a year in interest tax free - unless you’re saving an absolute fortune for her (or pay higher rate tax) you don’t need to worry about that.

HollyBookBlue · 27/07/2023 19:34

Chickpea17 · 27/07/2023 19:21

If we save it in my name and gift it when she older won't she have ti pay tax on it?

Show quote history

As far as I'm aware only if you both died within 7 years of gifting it and your estate was large enough to qualify for inheritance tax.

Also assuming you're not talking about massive amounts of savings... If the interest on your savings is less than £1000 a year (£500 if you pay higher rate tax) , a savings account will give you a better interest rate than an isa.

Another way of planning for DC's future is to start a pension for them. Putting just £15 a month away in a private pension for them starting when they're tiny could really help them when they're retired. Compound interest is amazing!

Original poster
Chickpea17 · 27/07/2023 19:43

HollyBookBlue.

We put 2k in a year in plus what ever we get from family and friends maybe around £200.

We started the account when my daughter was just weeks old and didn't really think about the nitty-gritty until the last few years but sound like we need to rethink a few things.

OP posts:
thebellagio · 27/07/2023 19:47

That’s the reason why I put money aside for my kid in an account in my name - I don’t trust that at 18 she’ll be responsible enough. She’s a great kid but I remember when I was 18 seeing my friends blow through the savings their parents had spent years building up on nights out.

I wish there was some sort of savings account that she could have access to at 21 or 25…

but instead I’ll keep the money in my name and if she needs some help the pot will be there for her

Original poster
Chickpea17 · 27/07/2023 19:53

thebellagio · 27/07/2023 19:47

That’s the reason why I put money aside for my kid in an account in my name - I don’t trust that at 18 she’ll be responsible enough. She’s a great kid but I remember when I was 18 seeing my friends blow through the savings their parents had spent years building up on nights out.

I wish there was some sort of savings account that she could have access to at 21 or 25…

but instead I’ll keep the money in my name and if she needs some help the pot will be there for her

Yes that's what worries me to 18 year old are not the best with money in my opinion. Time for a chat and rethink with my husband

OP posts:
Wenfy · 27/07/2023 19:58

Chickpea17 · 27/07/2023 19:25

Won't she have to pay taxes if it's in my name and I gift it to her?

Show quote history

Only if you died within 7 years of your gift - if you pay regularly it should be fine

SweetPetrichor · 27/07/2023 20:15

My parents saved for me and kept the money in their name. It was used to put me through uni debt free and I am extremely thankful for that. They paid my accommodation and gave me a monthly budget. I did also supplement it by working part time.
I had another savings account with money from family that DID become mine when I turned 18. I actually still have it completely untouched cause it has always been earmarked as my ‘new car’ fund. I am 33 and only just about to use it this year! 😂

HollyBookBlue · 27/07/2023 20:20

Chickpea17 · 27/07/2023 19:43

HollyBookBlue.

We put 2k in a year in plus what ever we get from family and friends maybe around £200.

We started the account when my daughter was just weeks old and didn't really think about the nitty-gritty until the last few years but sound like we need to rethink a few things.

You can't take the money out of DDs isa, so just stop paying into that and start a savings account in your name. Keep an eye on your total annual interest (including any savings accounts you have for yourself) and if you're getting close to the 1k limit, then start an isa in your name.

Lonnnngsummerholidays · 27/07/2023 20:22

At 18 she will be an adult and it’s her money so it’s completely up to her what she does with the money.

Original poster
Chickpea17 · 27/07/2023 21:24

Lonnnngsummerholidays · 27/07/2023 20:22

At 18 she will be an adult and it’s her money so it’s completely up to her what she does with the money.

Turning 18 is not what makes you an adult not in the real world anyway in my opinion.

But thankfully she only 5 so not that much money in the ISA yet which she can have when she turns 18.

And the rest will go into another account in my name, but she won't have access to and will only be used for more practical stuff when she need it.

OP posts:
Original poster
Chickpea17 · 27/07/2023 21:28

SweetPetrichor · 27/07/2023 20:15

My parents saved for me and kept the money in their name. It was used to put me through uni debt free and I am extremely thankful for that. They paid my accommodation and gave me a monthly budget. I did also supplement it by working part time.
I had another savings account with money from family that DID become mine when I turned 18. I actually still have it completely untouched cause it has always been earmarked as my ‘new car’ fund. I am 33 and only just about to use it this year! 😂

Yes me and my husband are now thinking about doing exactly the same thing.
She may or may not want to go to university when she's older, but at least the money is that if she wants to.

OP posts:
OnlyFannys · 27/07/2023 21:33

As others have said its not going to be your decision what she spends it on. With the best will in the world you can offer her good advice with how to spend it and make sure she has plenty of education about finances so that she hopefully takes it on board but ultimately if she pisses it up the wall it will be her mistake and an expensive one to learn

Original poster
Chickpea17 · 27/07/2023 21:37

OnlyFannys · 27/07/2023 21:33

As others have said its not going to be your decision what she spends it on. With the best will in the world you can offer her good advice with how to spend it and make sure she has plenty of education about finances so that she hopefully takes it on board but ultimately if she pisses it up the wall it will be her mistake and an expensive one to learn

Thankfully she only 5 so not that much money in the ISA yet which she can have when she turns 18.

And the rest will go into another account in my name, but she won't have access to and will only be used for more practical stuff when she get a lot older.

OP posts:
Lonnnngsummerholidays · 28/07/2023 13:20

Chickpea17 · 27/07/2023 21:24

Turning 18 is not what makes you an adult not in the real world anyway in my opinion.

But thankfully she only 5 so not that much money in the ISA yet which she can have when she turns 18.

And the rest will go into another account in my name, but she won't have access to and will only be used for more practical stuff when she need it.

Show quote history

It doesn’t really matter what you think. Legally she is an adult and will be entitled to do what she wants with the money in her name.

Original poster
Chickpea17 · 28/07/2023 13:30

Lonnnngsummerholiday.

Guess you didn't read my reply I said she would get the money that in her ISA when she 18 but we won't be putting anymore in it from now on.

Will put money in a account in my name each month which she won't have access to and me and my husband can decide what it's used for.

OP posts:
Drenchend · 28/07/2023 13:37

You should have put it into stock and shares isa, low cost index funds.

How everything perhaps you can do that Joe, does your provider have that option?

We have premium bonds with a few hundred in only ( i would never use the to properly save).

Then a cash isa with a few thousand in for car/ lessons / fun stuff... /travel.

Then a stocks and shares isa with considerably more in which is about 17% up. That's their capital for uni or house etc.

  • inheritance... (sadly) we wish they had the love of the grandparent instead.

They have hyper jar cards as well with less than 100 in to learn to manage money and budget.

I also think it will be good practise for them to manage different pots of money.

Drenchend · 28/07/2023 13:39

Op, if you get in proper in financial learning now... Show her budgets, money, tax etc by the time she gets any money she should be well versed to handle it sensibly.

I also add in fun for my dc as well because I think it's much easier to save and look long term when you also enjoy short term