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

Yes great if you can. In real life, no one I know has these types of opportunities, I didnt, my parents didnt, so its not essential but I see on this forum a lot that its written about that if you cant do it you might as well write off your children's futures there and then

Then you get people poo poohing the sheer amount of opportunity that 100k can give you if they can only buy a shitty flat in a shitty part of London. My thoughts and prayers are with those people in South Norwood or Thornton Heath, Catford etc.

God bless them.

According to the compound interest calendar, with an initial investment of £500 and a savings period of 20 years, you'd need to save around £360 a month.

It's not negative to say many families don't have £8640 a year plus £1k deposits plus own personal savings to survive the next 20 year

I do find some attitudes to this by British people a bit boggling. For most of the world, and for most of British history, saving to send your children forward in the world is totally natural. Whole families working together to support the next generation to do better than they did. The ‘I didn’t have help so they can do it alone too’ attitude is SO WEIRD to me.

That’s why you put it into something like a LISA

I agree. The British also seem to wipe their hands of their elderly parents. It’s the flip side of the same coin. They seem to be very ‘me’ oriented but wrap it up in convolutions of ‘my boundaries’ and other weird shit.

I think there are limits to how much you can gift to family for tax purposes and you have to be confident that you will live for at least 7 years after to ensure there wont be inheritance tax to pay.

This is the correct advice. However, keep it in your own name, your own ISA, or else they will have full access at age 18 and be able to spend how they want. I realised this a little late so my kids do have their own ISAs which will be roughly 15k at 17. I’ve told them this is for driving lessons and cars, gap year or uni costs and not to be squandered.

Keep it in your own name!
No child should have £100k given to them at 18. Or any knowledge that this will ever even be available to them. The only thing that makes youngsters work hard is because they know they have to.

Jeez,I wish I had been able to set my kids up like this! I was very proud that I could pay the £1K deposit for DDs rented flat from my life savings. I feel somewhat inferior now!

@Easeple I don't follow why you are quoting my post. I think this figure is unachievable for most parents to cough up

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

But it's really hard to earn enough to pay rent & save a deposit now even if you work really hard....

No one knows what careers will look like in 20 years time. When I was at uni in the 80s there were no mobile phones, computers or access to the internet. The job I do now didn’t exist. Everyone is getting so het up about AI, there really is no need! New jobs that we haven’t even thought about yet will materialise.

Anyone who was around in 1999 will be well aware of the ‘millennium bug’ that was going to crash all our systems and ruin everything. Funnily enough nothing happened on January 1st 2000. My point is, the media loves to whip up worry and hysteria when there is often nothing to worry about at all.

If you have the funds to save £100k for each of your children, by all means go ahead and do it but save the money in your name and only give it to them if, as and when it’s needed. Your children will get jobs when their time comes, perhaps in a field we’re aware of now, perhaps in something new that we can’t even possibly know about yet.

For now, it’s more important to you all to enjoy the time you have together. They are small for such a short time. Don’t deny them experiences because you feel you have to save every spare penny for their future. You really don’t need to do that. They will find their way in a world that changes all the time.

I wouldn't bother with a target. Just save and invest as much as you can without making their childhood frugal.
Once they are nearer 18 you'll have a better idea. Having said that if you are paying tax on savings then it's worth putting some in their name.
Teach them how to manage money, how to save, invest, how to spend. Especially once they are young adults. I hate the mollycoddling idea of charging rent and "saving it" for them. Teach them how to save properly.

Nobody did it for me
That's a very common response. My parents didn't help so why should I. I wanted to do a better job than my parents who I was helping financially at an early age. My DC had lump sums for house deposits and both bought in their mid 20s. They each have SIPPs, ISAs and S&S which they have saved and grown themselves. Neither in super high earning careers but are very financially aware.

It sounds like you are making my point for me ...

Why don’t you use the 200k to buy a property, in 10 years that should double to 400k, you can sell and give both 200k (to rebuy) or they could live in it together/rent it out and split the proceeds to cover rent elsewhere?

Why don’t you use the 200k to buy a property, in 10 years that should double to 400k, you can sell and give both 200k (to rebuy) or they could live in it together/rent it out and split the proceeds to cover rent elsewhere?

she doesn't have the 200k now & property is not the investment it was imo.

She doesnt have 200k, she is trying to save it up over the next 20 years or so.

Pftttt. Don’t be ridiculous.
Bring them up to have a good worth ethic.

The downside with keeping it in your own name is that if, in the future, you need to claim Universal Credit or worse still, go bankrupt, you can't turn round and say that the saving are for your kids. It's yours and you will either have to live on it or give it up.

Perfect advice

Not at all 😂 forget shitty areas, you can live in one of the most expensive parts for not far off the £700k you’re saying they need to live in London at all . There is plenty cheaper in London

Not up north it hasn't. Rentals were affordable around five years ago. While we did have insecure employment and lower wages, having a home was achievable, both rented and bought. Housing is the biggest issue for people starting out today.

You can still buy a family home in my area for £160-£200, which means saving a deposit through your 20s and buying in your 30s for most people.

Thanks for everyone's input. I find it really interesting to hear the different perspectives and there isn't much that i disagree with, I think it's all a matter of perspective.

I'm an single parent older mum so im almost 20 years into my career, which ive deliberately taken a big step down and gone part time (due to childcare costs and mental health/stress). I deliberately held off from having kids in my 20s and early 30s because i felt like I couldn't afford them. I now earn under the national average (which apparently is £37,500) but im very fortunate in that i could earn more and will possibly do so once they are older. Im also fortunate in that i bought a very reasonably priced house 15 years ago, did a major renovation and now have a very low mortgage but the house isnt worth loads and is well outside of London so downsizing in future wont yield much. I understand that not everyone is in such a position.

However ive done some sums and worked out that based on 2 kids and saving within a pension (which can currently be accessed at 55 and then 57 in 2028 so a potential saving vehicle for parents who had kids at 30 and older) for one person on national average wage of £37,500 would cost £287.70 per month over 20 years to save up £200,000. Thats assuming net investment growth of 6.5 interest. That's £9.50 per day or £66 per week.
Thats putting £400 extra into your pension per month - which only costs £287.70 because its tax efficient and you are taxed less. So that's £3,452 a year or £9.50 per day. Is that hugely unrealistic? It becomes much more realistic in a 2 parent family.

Would you say to someone getting one takeaway a week, buying coffees out and 2 tv subscription services that it wasnt realistic for the average family?

I am pretty frugal at the moment and I think it will definately get harder as kids get older but i dont particularly feel like im missing out on life. We do loads, just focus on free things or maximising annual memberships to more pricey places. That said there are loads of things i dont spend money on which arent for everyone and i will probably want to adjust in future. I dont buy clothes unless i use the money from selling something, i cut my own hair, drive an old banger, eat own brand food and dont eat out or drink often. Holidays at the moment wouldn't be fun due to being single and having such young kids.

That said I don't think its super unrealistic to save less than £70 a week (which turns into £400 per month due to savings on tax) extra a month into your pension so that can have available up to this amount IF needed. It's not for everyone and thats absolutely fine but I wouldn't call it a crazy

What i absolutely agree with is the importance of giving kids the right mindset on working hard and being financially savvy. Also on giving a great childhood and lots of experiences, i just think that can be done on a lower budget and holidays dont have to be every year or can be done on a budget also.

I dont think i will have an actual figures target in mind as PPs have pointed out things change. I also find it reassuring that not everyone is panicking as i am about how things will be for our kids future generation in terms of building their own financial stability and careers and home affordability. I hope you are right. Perhaps ive been watching to much Gary Stevenson about us moving back to the wealth inequality of the 1800s.

Pensions savings are very tax efficient.

On a salary of £37,500 putting £400 per month extra over 20 years would get you £200k assuming average real interest of 6.5% - due to tax savings that would only cost £287 per month which works out at £66 per week - so possible but it means cutting back on other things so not for everyone. Understanding that many are struggling anyway with cost of living so its not possible for all but it is possible for some even if they are not high earning.

Exactly.

The British cultural attitude that frustrates me is that parents seem unwilling to help their children, even refusing to let them live at home for as long as they might need after turning 18. It feels like parents are desperate to kick their children out and have no desire to see them again once they reach adulthood.