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Original poster

Financial question

36 replies

knittedbreast · 12/04/2011 11:51

Can anyone help me please? I have decided to start putting some money away every month for my son since he turned 5, this is the first month I need to pay the money away. I havent done it earlier because we were students and had no money at all let alone for saving. I havent done it for my daughter as I dont think itl be fair to start her off at 2 while we havent saved for him until aged 5, but we plan to do the same fir her once she turns 5 aswell.

Question is, I know nothing about bank/building accounts or savings accounts. My wages are paid into my very simple savings account and my bank account gets my cb-completly the wrong way round I know.

Id like to open some kind of account that I am in control of, that he can have aged 25. However I would also like the option that if the world came to an end we could use the money to save ourselves if it came to it. I would also like some say in how the money is given to him when he comes of age, I would like him to use it for travelling/studying/car/flat/baby etc... I dont want him to drink it!

I will also be adding smaller amounts at birthdays and christmas and will encourage family to do the same. I have heard of trust funds, but ihave no idea what they are of how they work.

Any advice? I dont want to go into the bank and be bombarded with self interested advice that isnt really independent if you know what I mean.

Any advice would be great, thanks :)

OP posts:
kennypowers · 12/04/2011 12:07

You should have your wages and child benefit paid into a current account.

Don't you find it difficult to use a savings account for your wages? Aren't you limited as to what you can do with ddebs and standing orders from there?

Once everything is going into your current account, set up a ddeb into the savings account for your son.

Also, did you not get the cheque for the child trust fund when your son was born? You can ddeb money into this, but it can only be accessed when your son turns 18 if i remember correctly.

michelle2011 · 12/04/2011 12:10

if you want any control over it i would advise the account needs to be in your name. we have childrens bonds but these will be available to my children when they reach a certain age, i can tell them how i want the money spent but legally they can do what they wish with it.

i would stick with 5-10 year accounts then reassess to get the best deal

moneyfacts.co.uk/compare/savings/fixed-rate/long-term-bonds/

twenty years ago i would have said invest in bvricks and mortar for them but now its not so easy with property prices the way they are, good luck

FabbyChic · 12/04/2011 12:12

If you put the account in your sons name with a provison that it is a trust fund you wont be able to touch it if you need it.

So you would be better off doing as Kenny said and having all your money paid into a current account and use your current savings account to save for your son, however, you should not be using other peoples money that they have given for his birthday etc., to get you out of shit should it come to it that would be wrong, so for other peoples to contribute you need an account not even you can withdraw from as that would be wrong.

Niceguy2 · 12/04/2011 12:16

Personally I wouldn't bother with a bank account. If you are planning to save for your son's future, I'd look to one of the new Junior ISA's when they are available (soonish). Get the money put away regularly and given you are saving for the long term, this will perform better than a savings account.

michelle2011 · 12/04/2011 12:16

i think if your kids are very young you can do what you want with money you have received as gifts etc. in the past i have used such monies to buy clothes etc with the (unspoken) blessing of the dconor (usually family). very basic to say but online banking is so quick and easy you can add to locked savings accounts in a minute

Original poster
knittedbreast · 12/04/2011 12:35

kenny powers, yes i do find it hard. I dont have any dds, i always put the money into that person or businesses account in cash 2 days before its due. I just dont trust banks, i hate them. esp barclays. when i started working i got my wages paid into a britannia savings account as i hope to close my normal bank account with barclays, so far i havent closed it because of the hassle of moving my cb.

so should i set up a completly new savings account in my name for his money or in his name?

whats a junior isa? (i dont have an isa,), i was told isas are a bit of a scam and you end up losing money? would i have access to my sons isa if need be?

what are childrens bonds?

my son has a ctf but it lost loads of money and i was told when i opened it it was a standard one with no investments, turns out they must have lied to me because it was invested they lost half the money and have informed me they only do investment ones. I dont want any money put in them at all. i have now moved both ctf to britannia but will leave them as they are and would prefer to open new savings account for the children.

i also dont want the money available at aged 18, i think its too young and would only agree to 21 as the yongest but would prefer 25

OP posts:
chicletteeth · 12/04/2011 12:37

Halifax regular saver pays 6% AER with a maxmimum monthly deposit of £100 and a minimum of £10.

You have to pay something each month and after 12 months, they transfer it to another account and you start again!

It's not the best return, long term but it might do in this instance for a while until you can use other options (childrens isa's etc.)

chicletteeth · 12/04/2011 12:38

He's an adult at 18, if the account is in his name, it will go to him.
If you don't want him to have it then - take it out before that and put it away in another account in your name, otherwise you can't actually stop him from taking the money out

DarkSkies · 12/04/2011 12:49

Could I suggest that you put a small amount in an account now for your 2nd child, just in case circumstances change and you cannot save for him in the future when he's 5?
You don't need to add to it as you'd do for the older one yet, just have something there, building up interest, just in case.

PiggyMad · 12/04/2011 12:55

What about having the account in his name but not telling him about it? You just keep all of the paperwork and information for it until you want him to have it.
Or have it in his name with you as trustee to benefit from no tax and then just before it comes to the age where the account is handed over to him then close it and put the money in an account in your name until you want him to have it?

Niceguy2 · 12/04/2011 13:01

The junior ISA's are what the new govt are proposing to replace the CTF.

It would be invested in the stock market so you would be subject to fluctuations (ie, the value can go up or down).

BUT

Over the course of 20 years you should see a much higher return than the same amount put into a bank account.

If you've put money into an investment account over the last couple of years then yes, it could have lost money. But come back to it in ten years time. These are long term investments, not short term.

However, if that still doesn't appeal then (and it wont to all) then stick to savings bonds I reckon.

Original poster
knittedbreast · 12/04/2011 13:06

chic, can you have multiple halifax regular savings accounts? so i could have one for me too! what do you mean they move it to another account? with the same interest rate or does it drop to your normal savings rate, does the 2nd years money get added to the first years or do you end up with a new account for each years savings? can you access the cash still?

is there any point in my opening an account in his name at all if i want control over the money ie he dousnt get it at 18. and if i need to take the money out surely i wouldnt be able to if its in his name?
what are these things ive heard of when they mature when the person is ages 20 something- they are over 18 but couldnt reach it til their 20s?

darkskies, i really dont want to do that as i would feel it unfair. if that situation did arise i would just take whatever had been saved for either child and halve it so they had it 50/50

piggymad that sounds good, but would i be able to take money out of an account in my childs name if i were trustee and needed it before he turned of age

OP posts:
chicletteeth · 12/04/2011 13:14

Yes, I've got 4 (well my three DC and stepDC all have one for which I am the registered adult). They have an adult regular saver too but interest rate not as good I don't think.

You can also have more than 1 for each child if you like, but it has to be registered with a different adult. So you can have one in your DC's name with his money which is registered with another adult (dad, stepdad, gran, whatever) and then have one in his name which is registered to you, which is your money! This is naughty but how will they know?

They transfer it out after one year since they don't allow the balance to get to over £1200 (assuming you pay the maximum in each month for a year) so t hey don't have to pay too much interest. But after the year is up and it's been transferred to an account of your choice, you can start paying in again.

There is no break in payments at all, the balance will just drop back down to zero after one year.

You can take the money out that's in his name as long as he is a child, there is no rule against it as long as you are named on the account.

I took out a few grand in my eldest son's name last year and shoved it into equities. It's now in my name (earning a much better return) but I know it's his money and he will get it back

DarkSkies · 12/04/2011 13:30

The rules on trusts changed a few years ago- previously you could hold off until 25, I understand it is now 18 only.
Not sure that there is any way around that- you may need to start a thread in 'money' or 'investments' to find someone who'd know about it.

We have made investments for our children in our own names, so we can give it to them at a later age IYSWIM.

not1not2 · 12/04/2011 13:35

Trust funds are for people with tens to hundreds of thousands!!
I'm not sure you'll find an account that will let you have access to the money but not them until they are 25.
6% is a pretty stellar rate at the mo
what about an account that you have access to until 18 but they can't without your sig (might have to be 16) then you just keep the money in your name until they are 25?
Tax issues for you once you are keeping it maybe?

Have you thought about premium bonds? (althought the interest rate is rubbish)

Original poster
knittedbreast · 12/04/2011 13:50

how do you know i dont have tens of thousends? ;)

ok, no i dont.

what tax issues are you refering too? if i say its for my son will i have to pay tax on it? even if its in my name?

6% is quite good....

OP posts:
not1not2 · 12/04/2011 13:55

ummm
I know very little about tax but if you are holding the money in an account in your name from 18-25 then any interest will be taxed at your rate because IR will consider it your money yes?

DarkSkies · 12/04/2011 14:06

If you want to benefit from the no tax thing, it will have to be in your child's name, ergo they will have access to it at 18.

onlion · 12/04/2011 14:12

while on the subject...can you buy property in a child's name?

amicissima · 12/04/2011 14:17

This reply has been deleted

Message withdrawn at poster's request.

Goodynuff · 12/04/2011 14:18

I think starting savings now is a great idea Smile
It is odd that you want other people (relatives?) to put money in, under your control, where you say what he can spend it on, and determine the age he has access to it, and it has to be available to you if you need it in the meantime...Perhaps if relatives want to put aside money for your dcs, it should only be used for your dcs, iyswim?
What happens if he starts university and needs the money at 19?

squeakytoy · 12/04/2011 14:21

What happens if you have another child? Will you be able to afford to do the same thing for them too? as that is only fair.

I would say open a savings account, in your own name, and then if you do have an emergency, that money is always there is you need it.

not1not2 · 12/04/2011 14:22

I'm talking about trust funds not Child Trust funds
trust funds used by people who own merchant banks type stuff

what were you talking about OP

(for your hundreds o thousands Wink)

onlion · 12/04/2011 14:23

I thought it was trust fund too...not ctf

not1not2 · 12/04/2011 14:30

I've wondered about the property thing too onlion
not that I have enough to do so I just need to know for my fantasy tax regime (it's a bit like fantasy football......)

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