Need to plan at to give at least £100k per child to set them up in early adulthood

[TulipLavender]

I have very young DCs and I'm currently nowhere near a high income but I've been thinking a lot about future financial planning.

What the impact of AI, unknown or insecure job market for younger generations, cost of living etc., I feel like I should prioritise saving to help provide some support for each of my DCs to help pay for uni costs and then support with later house deposit. I'm also expecting that they may need to live at home long into their 20s.

So I'm thinking i need to plan to be able to have £100k available for each child. Even this seems like it may not stratch the surface with unknown future uni costs and house prices but it will be a struggle to achieve this savings goal.

What are your thoughts around future financial planning for yoru children, do you have a target amount in mind? Would you prioritise this over paying a lot for things like holidays now?

YABU - its too much to give and need to reprioritise enjoying life more now

YANBU - with such unknown futures for our children, they will need at least this to ensure they have a safety net and support with getting on their feet

9/11, the 2007 economic crashes in the 1990s and 2007, introduction of social media, increase in Uni fees, COVID pandemic. Every generation has it's challenges

Are you kidding?!? I sold my 2 bed flat in SW1 for £850k last year 😂 no one has a house in that area admittedly but we’re talking about a starter flat.

It will be a deposit for a first home. £50k gets you a deposit and a foot into the property ladder. Hopefully after 5-6 years, the house as increased in value and her child has a better job which enables him to buy a bigger home. No one buys a £700k as a first time buyer

How does it make a deposit?

Its 100k deposit!

And 'shitty part of London'!!! Shitty flat!!

Lol

We dont all come from Maida Vale, so sorry.

I think this will be more like the return of the 1800s. Have you heard the amount of parents and young people talking about how they need to get into construction to be AI proof and earn a good living? Have you seen how easy it is for middle class homeownership to disappear in a couple of generations? Have you even just observed how much poorer and less developed we are as a nation post 2008?

we’re heading towards the days of normal people being manual workers and the assets controlled by the elites, and the worse thing is - many of us are actively participating in it!

How did 9/11 impact a young person in the UK? These events resolved themselves, Covid was over in 12ish months. Unaffordable housing has been an issue for the past 10 years and wi continue, as will the demographic timebom, which will get worse. Not at all comparable.

increase in uni fees where you can get a loan isn’t the same as not being able to afford somewhere decent to rent. One has a solution but the other doesn’t.

Reading your posts, the comment that jumped out at me was about your frugal lifestyle.

It would be lovely to be able to help your children with a home deposit one day, but at what cost? What do you want them to remember about their childhood?

For me, travel and providing experiences for our children has been important. That and building our own finances, so that when/if there are inheritances from grandparents, we can pass that on to the children. Just not at the expense of enjoying family life and experiences as they grow up.

How do you even save that on a not very high income? £1k a month is £12 K at the end of the year, so would take 8 - 9 years at this rate per child.

Meanwhile the kids are missing out on family holidays etc. if this is taking all extra funds.

Just give them a good childhood and save what you can every month, but you need to prioritise yourself and plan for your own old age.

I think you’re right to want to financially plan. I am a worrier too but I think it’s futile. AI will take many jobs and already has done - particularly knowledge sector roles. Indeed the so-called ‘godfather of AI’ Geoffrey Hinton paints a very bleak future for the professions and advises people to become plumbers!

I wouldn’t however assume the 100k you may or may not hand over is for a house deposit. With baby boomers statistically owning so much of the housing, I’ve always questioned what will happen to property prices once that stocks starts being sold off. I think we are beginning to see some of that now with detached houses selling for 35% less than at their peak in London post covid. With salaries so low and fewer people coming up behind that generation, surely prices can only fall a bit?

Even if prices don’t fall, by far the best investment you can make is a boring old index fund in the form of an ISA. You can then simply pass that investment onto your children (investment - NOT cash savings as the value of this erodes over time). They can then decide whether to keep investing in it, whether to buy property or whether to draw down a bit each year to spend but keep adding to it and watching it compound.

My own approach is to spend it on their schools which they absolutely love. It may be for nothing in terms of careers but if they fall under a bus tomorrow, I will know they’ve had the best experience and education that I could (barely) afford. If nothing else, it sets them up to have ‘hobbies’ for when we are all on universal basic income and freaking out about our lack of purpose…

Digitisation, the internet, globalisation, financial crashes, the list goes on. Home ownership has been almost completely unobtainable before 30s-40s for decades now. Jobs and entry level jobs have become more automated for centuries and people have been worrying about offshoring jobs since the cotton mills closed.

£100k sounds completely unrealistic for most families. I agree that saving something for them, if you can, is a good idea these days. We topped up their means-tested minimum student maintenance loans to the max (as is expected), put around £10k each in ISAs towards house deposits and gifted £5k towards the wedding for one of them. We have £5k each set aside for the others for a wedding or towards house expenses. We paid for driving lessons as birthday/Christmas presents. It feels like enough and is what we can afford after sorting our pensions out and paying off the mortgage. We couldn’t afford to save anything until they were mid teens. They are all financially literate and had jobs from an early age, which felt important.

It's a small deposit for a shitty flat in a shitty part of london. I do know london. The avg house price in a good part of london is 700k. How does 100k make a deposit on that? Only if you have an income of 150k.

You don't know it! You don't need 700k to buy a flat in London and you even buy houses for that in parts that are less fashionable but certainly not shitty 😆

The average London FTB spends 500k on their purchase...

I’m sorry but this is an insane idea. Why does anyone need to be handed a hundred grand??

The best financial gift you can give your children is to teach them about money from an early age, encourage them to save and earn.
Whatever you can put aside for their future is great, but you need to be financially secure yourself first.

Op has multiple children and not a high income. So with three kids, for example, that would an initial outlay of £1500 and then £390 a month in savings. So in the first year that's £6180 and then £4680 per year after. Hardly affordable for many families

The best financial gift is to develop children with a good work ethic, to have robust resilience and be adaptable when things go wrong. To have financial literacy as you say and also good attainment in education.

To be brought up with the knowledge that you work and earn your way to having things, that life and belongings are not disposable.

If saving the money isn’t going to mean your life is negatively impacted then do it. I wouldn’t if it meant I wasnt able to live, have holidays etc. your life now is as important as theirs will be in the future

How do you even save that on a not very high income? £1k a month is £12 K at the end of the year, so would take 8 - 9 years at this rate per child.

It's the power of compound interest, save smaller for longer.

If you save £130 ish a month for 20 years with 9% annual returns & 2% annual deposit increases you are looking at 100k of which 60k of it is interest.

Do it for 30 years & you get 280k
40 years 750k
60 years 4.7million!!!!

The tricky part is being able to commit to savings for such a long time.

The goal to be able to give the dc €100k each is different from saving up €100k each.

Understanding that difference is crucial to understanding how to build wealth.

For instance, and this is obviously a very simplistic example, if you work out that you must save a set amount each month for eighteen years, you might feel you can’t then afford to buy a house and should rent. Whereas by buying a house, and building equity, you are creating wealth, which you could then borrow against, and can even supplement that with lodgers if necessary.

You need to think in terms of investment - including investing in yourself - in your career, in your pension, and in them through education (not suggesting private fees necessarily), education about money too so they learn how to earn, not just how to spend.

@TulipLavender

no, OP!! Go on a proper holiday now! The future isn’t guaranteed for any of us, we need to enjoy life while we can!

Mine have also worked since 14 - paper rounds, cafe work, waitressing, shops etc.

Both purchased cars outright - £9K each - both are working through Uni, DD earns £23K part time 3 days a week. DD2 works in the holidays and pays her own way in Uni. we help with train fairs home, clothes and cash at christmas - but not loads.

They are independent, financially aware and are on their own paths.

Nobody did it for me, I gave them the encouragement and tools to do better.

Depressing how negative people are about the very sensible notion of trying to give your kids a head start. Compound interest is an absolute miracle. It’s mind boggling how little you need to put aside for a newborn baby for them to be able to retire at 40, if you whack it in a global tracker fund and sit back and do nothing.

People are so quick to be so bloody negative and nasty, we should all be a bit more positive and ambitious like the OP and the world would be a better place!

OP I would suggest you do the free Rebel Finance School course - it will equip you with invaluable knowledge about how to set your kids up for life. Agree that the foundation though needs to be their financial education.

Absolutely. But imagine giving them all that AND their first £100k to get started.

If you save that much will you be happy whatever they do with the money or will it come with strings attached?.

When you are still paying a mortgage in you 60s and can't afford to retire will you be pissed of that the dc are renting, or have gone on a round the world adventure, or decided not to work much because they'd rather live on the money you gave, or have married and divorced and half went to another person?

It depends on your definition of not well off. Presumably quite well off to even consider this.

But as I said above they could well find themselves exhausted by life by 40. It’s not desirable to be out there slaving from a young age. It’s a privilege not to