Childrens savings

[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

kb,

I don't know much about this, although there is the (soon to be launched) junior ISA option, and if you child is 5 then he might already have a Child Trust Fund you can put money into.

However, both of those I think (please correct me anyone if I am wrong) have the entire amount given to the child when they are 18. There isn't the chance to draw money out of it (eg for a musical instrument, or something else special they really want to buy) when they are any younger. And - no matter how irresponsible they still may be at 18 - they get the whole amount then, no strings attached. Like you, I prefer a bit more control.

What we did for both our kids was open a normal Childrens account at Nationwide. I am guessing all high street banks have similar accounts. It is a passbook account, so withdrawals can only be made with the passbook (which is navy, and around the size of a passport, and has typed details of every transaction). We put birthday and christmas money in it. It pays a reasonable-ish rate of interest (0.75% at the moment). You might find something with better interest if you ask around. The winner for us is that the children don't automatically just get the whole amount at 18, to spend on a wild party or whatever. We have the control of when we give it to them.

Something similar might work for you, but see what other responses get posted too.

Hopefully someone else will post who knows more about the junior ISA stuff.

alaska, when you talk about a childrens savings account, if it is thier name why and how do they not get the full amount at 18? how would you stop that?

can you take money out of this account whenever you like or if really needed?

is my only option then to open a savings account in my name for my son and then give it to him when i feel he is ready?

Practically, because you need the passbook to take money out, and that is kept in the study in our filing cabinet.

My gran did a similar account for me & my siblings, and I still have the passbook showing every time she put 5 or 10 pounds into the account. I think if I insisted I could have had it at 18 as it was in my name, but actually I loved the fact it had been saved on my behalf, and think I ended up spending it on my first car aged 21. My brother used his to supplement his university years, and I can't remember what my sister did with hers.

I am pretty sure money can only be taken out of an account in the child's name, if it is for the child. Until a certain age, I am the signatory on the account (I think this is 7 or 11), and then beyond that the child is the signatory. A child's account will have interest tax free, so there are strict rules that is mustn't be used as a savings account in effect for the parent to avoid paying tax. So your second paragraph may be a problem, although if it is to buy things for the child that may be OK? I would ask someone for some more advice.

If you open a savings account in your name for your son, then the only two problems I can see are (1) you would have tax deducted on the interest, and (2) if you die within 7 years of giving it to him (hopefully not - sorry to sound morbid) then I think it still counts for inheritance tax.

I am no expert on this though, so hopefully someone else will come and comment too.