Children’s saving accounts

[Gingerbreadwoman82]

I’m looking for some advice about somewhere to put £3k my dd has been given.

I definitely don’t want a junior isa because I don’t want it to be locked away or her to get access to it at 18, I know what I was like at 18 and I don’t want it to be wasted on clothes and nights out.

I will want to add to it but not necessarily every month so a regular saver isn’t going to work for us. I’m already putting some money every month into a pension for her so she’s got some chance of retiring before she’s 80!

I’m just interested in what other people are doing?

Unfortunately the only way that she wont get access at 18 is if you set up a formal trust fund, with nominated trustees, that she cannot access until the age you specify.

Otherwise, with any savings account or ISA, it becomes her money on her 18th birthday, you will be locked out of any online access and removed as a signatory from branch access.

She will get letters as she approaches her birthday, so no hiding it, or 'hiding the bank book' as I see written on MN so often.

My DD was 18 last week so we are just going through this procedure with her S&S ISA and some inheritance money in a savings account. That has been moved to a maturity account, and I am no longer a signatory.

My online access to her ISA is stopped and she now has a Pin to set up her own online access.

All letters are addressed to her, so unless you are going to open the email of an 18yo, then you cannot stop them having access, except via a trust.

In terms of good accounts, just search for children's accounts and look at interest rates. Also check when they mature. My DD was 16 when inheritance was handed into our control, so we were limited on child accounts still open to her (some stop at 16) and she couldn't access adult savings accounts. But we knew it was only 18mo till she turned 18, so just wanted a reasonable rate. We went with Skipton.

Other option is keep it in your name in a separate account.
If you are in Scotland you might find it's 16 when she gets access to it.
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In terms of a trust fund, I would guess just setting it up and running it could cost a big part of the 3k.

We were charged by the solicitor who was the executor of the inheritance for a few months before he passed it in to our control. Fortunately we could afford to cover the charges ourselves, so she didn't lose out compared to her DB who was already 18 and so got his money outright.

I’m definitely not going into the faff of setting up a trust for £3k, I think I might put it into an account in mine and DHs name but separate from our other bank accounts, then if she wants it at 17 for driving lessons she’s got access to it but if she’s a wild child I can keep it hidden away until she needs it for something sensible.

I was thinking about putting it into a stocks and shares isa in my name but I’m not sure if I should be taking that risk when it’s not my money.

The child and junior accounts have MUCH higher interest rates than normal savings, but yes, they do get letters addressed to them from their 16th birthdays onwards. I have been very open with mine about their savings, letting them see how much interest they have earned, taking them to appointments at the Halifax to move money around to best advantage in the in-branch accounts. Better to teach them how to look after money than to keep it hidden, IMO.

We have a mixture: NS&I bonds are great interest, you can buy them online when you have the money, cash them in if you need to, and if you buy just before their 16th birthday they keep getting great interest til they are 21.

Otherwise we have Halifax Junior Saver, and NS&I growth bonds,

If you put it in your own name, then make sure you have a will that states that the money in that account is for her, otherwise it could go to your DH if he is your beneficiary, then onto anyone else he chooses to leave it to (can and does happen when a spouse re-marries and DC get cut out of the second parents will)

As scrub says, maybe better to go the education and involvement route with your DD, making it clear that if it is wasted then there is no more!

We didn't have a choice in keeping our DC inheritances secret, as the solicitor wrote directly to them, and DS was 18 when the majority of money was distributed. We have however spoken to them at length about how lucky they are, how it is a decent house deposit, how - if it is frittered - then it will take a long time to replace. They both had S&S ISAs beforehand and are just drip feeding it into those accounts monthly.

DD has dipped in to pay towards a better car (we gave both a contribution to very basic car) but is about to have a gap year and has a PT job so is intending replacing it from wages.

We've got an account under our DS's name but it's part of our account with the hsbc so he doesn't know about it yet and can't touch it. Think he has more savings than we do at the moment 🙈

There are easy access kids accounts that become theirs to use at sixteen but you can choose to withdraw the money before then if you’re really concerned- we’ve got the Halifax kids saver at 2% alongside the ISA (3%) so it’s better interest than almost any of the adult accounts at the moment and also allows withdrawals.

Other option is to take them to the bank at sixteen and open a long term fixed account so it’s locked away until they’re older. However, you’d have to trust that they don’t just accept the early closure penalty and take the money as they’d be able to.

Agree with @scrubthedecks though, the best thing is to educate them to make better decisions than to hide the money. I was given £1000 when I was sixteen and wasted it on rubbish so wish someone had nudged me in the right direction!

Dd is 1 at the minute, as much as I’d like to think she’ll grow up to be sensible and understand the value of money I know there’s a chance she won’t, and I don’t think she’ll get another lump sum unless I win the lottery.

I won’t keep it secret from her but I’m definitely wary of her getting her hands on it as a teen!

You can only educate so far.
Some kids can be a bit 'I know, I know'. And may not blow it in one go but fritter it on £20 here £30 there.

@AvoidingDM I’m in my 30s and I’m still surprised at how lots of little purchases add up, hopefully dd will grow up to be more like her dad, it would take a crowbar to part him from his wallet!

OP, for small sums that don't justify setting up a discretionary trust fund, the one and only way to insure Little Johnny or Little Jane don't fritter the money away when they turn 18 is to invest it in your name.

Unless you are already maxing out your ISA allowance, putting the money in an ISA will ensure it's tax free. Given the long time horizon, I'd say something like a stock & shares ISA is sensible.

My DS inherited £30,000 when he was 14. He was aware of the money from the start and we let him buy a computer that he wanted with some of the money but then told him the rest would be put away in a savings account in his name. We stressed to him that his grandad wanted him to use it as a house deposit. He's now 18 and he has never touched the money or shown any interest in it. Luckily he doesn't drink or go out partying but he does drive and own a little car. However, I can honestly say hand on heart that we trust him with the money.

If she's only one put it in a children's ISA or savings account and reap the high interest. Take it out before she's 16 and put it somewhere out of reach. In a 5 year fixed account maybe. So she can have it at 21.

EllenJane - unfortunately Op wont be able to take anything out of a childs ISA at 16, 18 is the earliest it can be accessed and then only by the 18yo.

Plus most 5 year accounts are only open to adults. As per my post earlier, we struggled to get an account for our 16yo, as a lot of child accounts stop at 16 and most adult accounts start at 18.

Op - I think putting it in your name is the best, maybe a separate fund within a S&S ISA, and you can then make a note on your will that the money in that fund is your DDs not yours? So if you died first, that money goes to your DD not your DH (or whoever your main beneficiary is).

Grandparents ave previously opened accounts for grandchildren at building society as follows. Mrs J Bloggs Re young Joey Bloggs. Money cannot be withdrawn without the named account holders signature.

Just do it in your name OP.

If your DD is young DEFINITELY invest it in stocks and shares. Don't panic when it falls in value, sit tight and then you'll be doing the best for them. Check out Vanguard (direct) 80% Lifestrategy Fund and just don't panic when it falls and you will be pleased when it's worth lots more.

Shouldn't young kids be going out and socializing why is it a good thing if they dont?

Op I have been drumming into mine since very young that we save - we spend for fun ( eventually going out and getting drunk and LIVING a bit) but that we dont spend all our money on fun stuff.

I read article that people are massively missing out by not investing in stocks for kids I would do this and make sure she knows about money!