Savings for babies

[frenchtoast88]

I have a 16mo who we opened a bank account for when she was a few months old. I have control of it on my online banking. We've been putting £50 a month in, not with a specific plan other than that we should be saving something and having it in her name seems nice and keeps it separate from our own savings that might get spent on house/holiday/whatever else. It's at £550 just now.

We're expecting #2 in April, but probably wouldn't be able to spare another £50 a month with stat mat pay and increased nursery fees when I go back to work.

Options:

• open new bank account for the new baby and put £25 in each
• keep the one same acct and keep paying in £50 but consider it "the kids" account rather than just in the name of older child, to be spent on them as we see fit for uni etc.

Does it matter? Am I overthinking this? Can we have a joint child 1 and child 2 account?

If it matters it's a junior ISA. I opened a kids 123 Santander account at the same time but haven't used it for anything yet.

For ease i'd probably continue putting £50 in and have it as an account for both kids. That way there's no "so and so has more than me" or potential guilt further down the line if one has slightly more than the other.

I would definitely continue to put £50 and then split it for the 'kids'. I say this as a second child who would be pissed off if her older sibling had more because they happened to be born first!

if you cant add your second childs name to it (I don't think you will be able to) Then I'd open a new account when they are born and instead transfer your £50 a month into that instead untill it reaches £550, then change to transferring £25 to each child a month. Seems the fairest way to me!

Came here to say what @TheLovleyChebbyMcGee said, think thats the fairest.

Agree with @TheLovleyChebbyMcGee. I wouldn't do it as a shared account as it is in DC1s name and would rightfully become theirs when they reach eligible age....you would hope they would split the money but opening separate accounts for each child and ensuring they have an even split seems fairer. We have the same issue where DC1 has more money in their account as a grandparent transferred them money but unfortunately died before DC2 came along. My plan is to just ensure the amount they get given is the same, eg they both get £2k at 18 or whatever so I'll have to top up DC2s.

@TheLovleyChebbyMcGee

if you cant add your second childs name to it (I don't think you will be able to) Then I'd open a new account when they are born and instead transfer your £50 a month into that instead untill it reaches £550, then change to transferring £25 to each child a month. Seems the fairest way to me!

Thank you! I had this thought too. Then thought about when child 1 gets to 18 and goes off to uni (say) does that mean no more gets saved after that point for child 2 as they'll be equal?

Or do I start at zero for child 2 and keep saving til they're 18. Tbh there are so many variables and I'd like to think we might be able to put away more than £50 a month by the time 2038 rolls around! Think I'm probably overthinking this whole thing really.

@CarolinaWeeper

Agree with *@TheLovleyChebbyMcGee*. I wouldn't do it as a shared account as it is in DC1s name and would rightfully become theirs when they reach eligible age....you would hope they would split the money but opening separate accounts for each child and ensuring they have an even split seems fairer. We have the same issue where DC1 has more money in their account as a grandparent transferred them money but unfortunately died before DC2 came along. My plan is to just ensure the amount they get given is the same, eg they both get £2k at 18 or whatever so I'll have to top up DC2s.

Thanks. I think I would keep control of the account even beyond 18. Never liked the idea of an 18yo being handed a chunk of money to fritter away. It would be used towards uni or maybe a car/driving lessons or towards a house deposit. My parents did similar for my brother and I, it paid for uni then a cheap second hand car once I'd graduated. So not sure if it being in child 1's name matters too much?

Most child savings accounts revert to the child at 16 or 18. It's one reason I've been hesitant to save a decent sum in an account in their name. They might well be sensible at that age, or not. Any money they get gifted goes in their own accounts.

If its a junior isa then this will automatically transfer into their own name when they then 16, and they can then access the money at 18, you wont have any control over it at all. Do not save for both kids into that account, as your first child would then be able to spend the whole lot at 18 if they wanted to- you will not be allowed access to this. Open the second child the same type of account, split whatever you can afford to start saving into them equally and go from there. Over the years one might like saving their birthday money more than the other etc so its unlikely they will ever be exactly the same. And im assuming once the elder turns 16 and you stop paying in you would then pay the extra into child 2s account which would even it up by the time they turned 16/18.

I would put the money into an index tracker rather than a savings account. Google compound interest and children.

As PP said Junior ISAs become the child's at she 16 or 18 (I can't remember). The best thing you can do for your child is teaching them the value of money and investing. That way there will not be any worries about them squandering the money, but also they will be set with excellent habits for life

www.fool.co.uk/ten-steps-to-financial-freedom/step-9-make-your-child-a-millionaire/

You can’t save for both in an account in one child’s’ name: the money will be under the control of the names account holder when they turn 16, and can be withdrawn by then (and only them) at 18.

Just to say re: accounts that children can access aged 18, though I understand the consideration around this, I was given money in this way aged 18 (think it was just over 6000) and used it to buy my first car, then it has always acted as a based for savings - I've topped it up and used it for things like my share of a house deposit, holidays when older etc. It was massively useful and I've always been grateful and I think I would have been quite offended if my parents gave me small amounts as they saw fit instead when I was legally an adult.

Ds has a similar set up now.

I opened up account for second child and put more money in her account than my first. They are now equal and I will stop adding to them at the same time. Birthday money got out into a different account.

@frenchtoast88 you won’t get the choice of keeping it under your control once your DC is 18, it will automatically transfer to them. You need a savings pot in your own name rather than theirs if you want control for longer.

I'd definitely put in Stocks & Shares ISA (tracker funds) than cash as per PP.

I had a thread on kids' savings a couple of weeks ago
Mine have a bank account each for birthday and Christmas money and then a S&S isa with Scottish friendly for my regular standing order plus an inheritance from great grandma.
I do keep an eye on fairness though as oldest gets toys and then youngest gets money as doesn't need those bigger toys buying.

If it was me, I would put £25 pm in 2 separate JISA’s for the DC. You need to be aware that your DC will be entitled to full access to their money at 18 and you can’t withdraw their money at all. This is a major concern raised in numerous MN threads.

Alternatively, I would just boost my own ISA with the £50 pm and mentally target it for the DC’s future. This means you can still access this should you need to because it is still technically yours.

If you only have £50 pm to save, save it in your own name. You do have your own annual £20k ISA allowance. I’m all for saving over the long term but you need to realistically assess whether you can tie it up during a pandemic/recession that won’t be short term.