Husband fears putting money in a junior ISA…

[Twoanddonethanku]

…as he is worried that by 18 our children may be drug addicts or delinquent and therefore it would be incredibly risky for them to have access to a few thousand pounds.

Backstory: I have 2 children aged 6 and 3. My parents said they wanted to put some money aside for them each month until
they are 18. They are saving £25 per month per child so by the time they are 18 the kids will have at least £5,400, not accounting for interest. I opened a junior ISA for each child which my parents pay the money into. This was sorted out a good few years ago, with my husband fully in the loop.

I also save for my kids, from my own personal money (DH and I both pay into a joint account, then the rest of our salaries is ours to do what we want with). Depending on how each month is going I tend to set aside £50 for each child per month in regular savers in their names. DH does not contribute to any savings for the children. He prefers to spend his money now while he has it and is of the opinion that as we don’t know what the future holds then we shouldn’t trouble ourselves too much about saving for the kids. I find this stance fairly contradictory as he takes advice from a financial advisor on pensions and we overpay our mortgage to get it paid off quicker.

DH wants my parents to pay the kids’ money into my Lifetime ISA as I will have more control over the money and can give or withhold it from the kids when they are of age with more control, whereas a junior ISA automatically converts to an adult ISA in their name and parents lose control of the account. I don’t want to do this as it means the kids can’t access their money until I am 60 (I’m 37 now so that’s 23 years away - they might need their money sooner).

DH has spoken to a financial advisor and also his therapist about this. Apparently they both agree that it is risky putting money aside for kids in a junior ISA due to not knowing what your kids might be like at age 18.

Personally, I had always thought the money could be useful for driving lessons, helping the kids get through uni, or even getting them a head start with saving or investing for their own futures.I had not considered that our kids might have gone so far off the rails. Perhaps this is really naive of me.

We are doing ok for ourselves but deffo not rolling in money and do not have a huge disposable income. It means a lot to me to be setting money aside for the kids for their futures.

So: am I being unreasonable? Really interested in hearing your opinions.

YABU - DH raises a valid point and you should find an alternative account to save the money in
YANBU - DH is being too risk adverse, hold your ground and keep the money going into their JISAs

I have a 19 year old and a 15 year old. A few years ago, every time they got a bit of money for birthday, Christmas etc, my older son would spend all of it within days, whilst my younger son kept it for months, years even. I patted myself on the back for producing a sensible saver! A couple of years ago it changed, now DS1 is more careful, and DS2 throws his money around carelessly.

Your bank manager is wrong. At 18 the JISA provider writes to the child to tell them about it and request instructions.

OP, I agree with your husband 100%. We have substantial amounts saved for our children but they are in our names. It will be tax inefficient if we both suddenly drop dead (might not be relevant for you if your estates will be below the IHT threshold) but that’s unlikely whereas the chances of an 18yo wasting the money seems a lot higher (and they don’t have to be a drug addict or delinquent to waste money). Keeping the money in your own name also gives you more flexibility.

However, don’t put it in your LISA or you’ll have to pay a penalty to take it out. Just use an ordinary ISA.

Thank you for this, you’ve put into words something I feel - that he’s betting more on them being off the rails.

@Sardines57 maybe he is saving for the children, just not in an account they’ll have exclusive access to when they’re 18.

We don't save anything in kid's names. When they are 18 they can have it from our savings. Why lose control, flexibility and options?

We have savings accounts in both DCs names, premium bond accounts & one has a JISA.
We are actively involving them in managing the money - where to put it/invest it as it reaches the max interest amount in the savings account.
We are trying to get them to appreciate the value of it rather than hide it from them.
This may bite us in the ass in the future - DD is 10 but she presently is very conservative & practical with the money & knows we would like her to use it on a car/uni/deposit etc depending on how much it is by then. She is starting to ask how much things cost; how much we earn etc so starting to see we can't just magic money out of nowhere.
DS (6) is less restrained but it's a process & we will involve him in it all soon too.

I don't think he can dictate where other people save their money for the kids. I can see his point to an extent - mine have junior ISAs but am thinking of stopping saving there once we reach maybe £15k so we do have control of some of the rest of the money. Have also been very explicit with them already that there is no more money for deposits etc

Junior ISAs have been fantastic savings options my kids. One thing thing I would question with your husband saying you should open a LISA instead it that you are then getting the tax advantage not the kids. My young adult kids are transferring the max from their junior isa into their LISA this year so they get the £1 k savings bonus, not me, which is what I want!

I'm with your DH on this one. I wish this wasn't the case but share his concerns. Children today have far more outside influences, however well you bring them up.

This!

My husband feels the same way, and it's something that does concern me to a lesser extent. We've compromised by using my stocks and shares ISA as a savings account for our son. It means we're disciplined about putting specific money aside for him (£50 a month) and it's earning interest, but we have the option to give it to him at a time we see fit rather than just as soon as he turns 18. Or to use it ourselves if we ever hit really hard times.

Aside from this, we are just very strict about saving from our own money in a "family" pot which we also hope to be able to give our son help from in future.

@MumblesParty op stated in her opening post that he is not saving for his children.

Just wanted to say thank you to everyone for responding. Some really interesting opinions and lots to think about.

I do hear the worries that a chunk
of money could be really destructive. I think this is what he is stuck on and it’s making him feel genuinely anxious.

lots to consider! We obviously need to talk about this more!

My husband received a lump sum of 25k at the age of 18. He spent the lot on drink/drugs/going out and having fun!
He says that he would never let our children receive a lump sum of money until at least 25.
He regrets that he could have put a big deposit on a house all those years ago, but he also said it was a good life lesson.
(He has turned out normal, good job, good with money)

I guess the only thing about this is there doesn't have to be a high chance of them being e.g. a drug addict because what you actually need to consider is risk + consequence.

So if you already max out your own ISA (not LISA in this instance as there would be a penalty on withdrawal) then the consequence of saving for them in your name is the tax consequences. In either (room in your own ISA or not) instance there is a potential for tax consequences if you die within 7 years. There's the possibility that if you have a financial catastrophe you are compelled to use that money to deal with it yourselves.

The likelihood of your children being totally fine might well be 95%, 99% who knows. But the consequence of them having a JISA if they aren't okay in the worst case scenario potentially life threatening.

So i guess I wouldn't view it as "implying the odds of them become drug addicts is higher than the odds of them being successful" but rather proposing insuring against the worst case scenario.

DS is now adult but we saved money in his name, and when he started working he added to it every month as he was living at home but once blew a large chunk on a holiday. SInce then, he has saved about £30k -- it fluctuates a bit though. He's also acquired quite a chunk via inheritances from GPs estates, and will soon be in a position to just about buy a small property with a small mortgage; once he knows where he will settle for a while. There were periods when we worried that he would not be quite so level-headed though.

Like the Child Trust Fund once they turn 18 you loose all control over this money. It does not work saying not to tell them the money exists as when they turn 18 it has to be moved to an account their own name. DD1 had a child trust fund and other savings and asked me to move this to a stocks and shares ISA in my name so that it is out of her reach. Lots of her friends blew their savings at 18. Saving for their future is absolutely the right thing to do if you can afford it, however no one can predict the future and the timing of giving them so much money at 18 is not always going to be the right decision.

I have done the same as your husband, for the same reasons. But it's also true that they won't know about it unless you tell them...

Team JISA here. If you are giving them money it has to be freely given. I had substantial funds available at university and didn't touch them. (Actually regret not buying a £30k terrace house in 1996). You can mitigate the risk of it being "blown" by educating your children but as others have said it is their mistake to make. Investing in pension instead seems ultimate in control.

The lack of trust people have in their children and their parenting is sad. Mine are 15 and 12 and the 15 will definitely move it to savings (we live in an expensive area so the LISA limit is a concern (or whatever it is now) but I would rather bet on them than not

and if it is used to supplement sensibly their lifestyle post 18 at Uni then that’s fine too

Depends on your wealth and your tax planning. If you have a healthy income, max out your own ISA every year, and you don't need the back up 10k for unexpected spending, then yes, you should open a JISA.

But if that money is the difference between, say, getting a private tutor to help your child in maths, then obviously it's not money well spent. You can never touch the money in the JISA. What if you divorce and end up with nowhere to live? That 10k of savings could give you a nicer flat.

I'd find it hard to put savings into an account I cannot touch. For 18 years. So much can happen.

Secretly taking a piece of post addressed to another adult and hiding it, intending to prevent them having it until some undetermined point possibly years in the future would meet my definition of stealing the piece of post from the adult it is addressed to. What would you call it? Just because that adult is your child doesn’t make it ok to take things that belong to them for what you perceive as their own good.

I haven't saved for my children (now 18 and 22), I saved for myself and fully expect to help them with a house deposit - but they will be gifts from me at appropriate times, not savings in their names.

My parents put £25pm into their child trust funds, plus the government £250 x 2 contributions. They had about £8k when they matured at 18.
They knew about them because we have always discussed finances, but the relevant financial institutions wrote to them before and when they turned 18. Unless you ate also intercepting your adult children's mail then of course they will know about them.

How often is it true that it's 'destructive' though?

They could fritter it away, spend it foolishly, blow it on nonsense. But actually hurting themselves with it is really unlikely.

Good point.