Financial question

[knittedbreast]

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 :)

can i buy property?? hahahaha! sorry. no, buying property is not an option, for me or the little ones sadly. :(

i want family members to put money in at birthdays or xmas if they want to, il be by no means expecting it at all and to be hones if they were to we are talking £5 at xmas.

if my son starts uni at 19 it will all be on a student loan anyway, any money i give him at 25 he can decide how he wants to use it, either to help pay off debt (i wouldnt encourage this) or for a deposit on a flat or a car etc..

i have another child and i plan to save the same for her once she reaches 5, if i had anymore then i will pay the same for each.

by the way i think some of you might be thinking of higher amounts than i mean, im looking at £30 a month, not hundreds.

so can you only have a trust fund if you have millions?

I am really keen on the idea of savings because my parents didnt do this for me and it would really have helped me out, i really love the idea of knowing my kids have some security even if they dont know about it and some help when they are much older. thats why i dont want them having it ages 16 or 18, when they older and more mature!

I have purposely put the money in the children's names so that I cannot touch it no matter what as I'm not sure it's an emergency quite washes and a bit was borrowed from me as a kid and not paid back, equally though they can only withdraw from an account they have knowledge of and a pass book for
Personally I would say if you don't have your own nest egg, I would sort that out first, just save the children's birthday money for them separately.

I too meant trusts, not CTFs.

knittedbreast (such a lovely image that conjures up! )- I would start a thread asking about how trusts work over in 'money matters' ('Investments' has hardly any traffic these days)- much more likely to get someone with knowledge of their technicalities than on AIBU!

they dont get birthday money at the moment but if they were to have savings people might want to contribute, but again they might not.

I will start saving for myself in a couple of months time once the holiday is paid for but i can cope with missing a couple of months out for my savings but i want to safe guard saving for my son every month no matter how tight things get.

i understand what you mean about emergencies but if we both lost our jobs we might need access to the money

Just an extra point - if they're in your name and you ever need to claim benefits they will count as your savings and you'll be expected to live off them. I think you're allowed about £16k. It won't matter if they're in the child's name.

We just kept quiet about our kids savings that they could access at 18, they didn't need the money then. But it made more sense to save in their names as they have their own tax allowence

good point socca

also I think amicissima is right if the money has come from you interest over 100 pounds is taxed at your rate (mind you at 0.1% it would take quite a while to get that amount of interest ) although I'm not sure whether it's the 100 pound level or the personal tax allowance that takes precedence?

have you tried money saving expert for the best childrens interest rates?
can you ask the same question on there?

there is only a problem with you being taxed on the interest if

• the money comes from you (the parents) AND
• the interest income is more than £100 per annum.

Personally, in the circumstances you describe, I would have a savings account in my own name (preferably a regular saver - the 6% one mentioned below sounds good, and for larger monthly deposits then Norwich & Peterborough do a 5% with monthly deposits upto £250 for families with children).

How much are you looking to save each month?

Yes I know about the 100 pound limit I just hadn't considered before how that took priority over the personal tax allowance (if it does).

I thought trust funds were really expensive to run with lawyers fees etc etc they are used to shelter property from inheritance tax and hand down large amounts of money tax free aren't they? (and retain control over the money assest etc)