Saving for children - best options? And how much?

[jollyunicorn83]

Just wondering what others are putting in place in terms of finances for children?

Ours are 3, 5 and 8. They have savings accounts each for about £1/year age. So will have £18+ when they leave school.

We are expecting them to go to uni but not necessarily fund it entirely ourselves so they will need student loans/PT jobs etc too. We married quite young and maybe they will too so that's another major expense we are considering. Also house buying after that (although I think we'd expect them to save for that either with or without a spouse) when the time was right. DH and I didn't buy our house until a year after we were married. We want to provide them with help and support and also need them to learn how to manage money and save etc etc.

Is this enough? Should we have other investments for them? Pensions? Shares/bonds?

Curious about what others have in mind for this

I presume you mean £1K year, not just £1 ?

To be honest, you'd be best to join the forum discussions on children's savings over on www.moneysavingexpert.com/savings/child-savings-tax-free/

Our 2 DC are now young adults and both have healthy pots of savings ready for house deposit etc in the future.

We did a combination of

• high interest children's saving (e.g. we added all our child benefit to their savings accounts)
• children's cash ISAs
• S&S ISAs which I managed until they were 18

The point at which they turned 18 and potentially had access to it all was a bit scary, but we'd done talked to them throughout the years about how we had saved money for their 'future' and this wasn't for spending etc and in fact they have both been very sensible about it.

Hi thanks for the link, I'll head over there!

Yes £1k I mean I'd glad you understood me :)

You have terrified me about when they turn 18, that is worrrying. My parents had the money saved and gifted it for the major expenses, there are 2 of us and we've all had about the same but for different expenses. Maybe I need to rethink them having their own accounts.

Thanks

The problem with not saving in the child's own name is that you miss out on their own tax breaks, and risk being taxed in your own account.
Also saving for them in their own ISAs for example means that they can end up with a pot of cash which stays tax free until they need it.

I think the answer is really to spread it around different places. Just before mine turned 18 I moved it into things which were much harder to access e.g. ISAs within a fund platform rather than high street banks with convenient mobile phone apps to transfer in seconds!

Wise move pebbles, I need to think this though although DH just said just before they are 18 we can move it out of their accounts if we don't judge they are reliable at that point.

18 is so young!

@jollyunicorn83

Wise move pebbles, I need to think this though although DH just said just before they are 18 we can move it out of their accounts if we don't judge they are reliable at that point.

18 is so young!

You can't do that, if the account is in the child's name. For things like a Junior ISA in the child's name, they get control of it at 18 and it's not possible to move it out into your name at all. Once the account is opened it is basically sort of held in trust for them - you can't remove the money into your name at any point.

If you don't want to hand great sums over at 18, save in your own names and put only enough into the child's ISA as you would be happy for them to have control over.

No - I didn't mean move it out of accounts in their names - I meant into accounts in their names which were not so easy access. So, for example, cash ISAs in high street banks transferred into their stocks & shares ISA on (my) fund platform. They were still involved, as they had to sign the new transfer forms, but it made it much more difficult to access on a whim.

At the end of the day though it's best to talk to your kids about their savings and help them understand finance to minimise the risk of them blowing their life savings on drugs or a Ferrari .

If it's not going to be huge amounts though then you can just save in your own name and gift it as an when necessary.

Depends on the sorts of amounts you are thinking about.
Depends on your income
Depends on your outgoings etc.

But an alternative is to throw "spare" more to paying off your mortgage, then, when they get to young adulthood you have lots more "spare money" to support them with, if that is what you choose to do at the time. It keeps options open.

I have 3 young adults. I would not want them having had £18K handed to them at 18. I suggest that overwhelmingly, young adults have a very different slant on life at 26 or 27 than they do at 18.
I would be distressed to think they spent money tht I'd save for them on things they would have chosen at 18 and then regret not having a deposit sized amount at 26

Well I certainly wouldn't have it in cash ISAs as interest rates are so poor, so I'd look at Stocks and Shares ISAs.

I'll be giving a sizeable helping hand to my DC and am hoping that my approach to finances is rubbing off such that they don't blow it.

But I'm only doing that because my own finances are in order. mortgage paid off etc.

Thanks for replies,

If it matters I think we're in a good financial position at the moment i.e. have no debt and a small mortgage that we max overpay every year and this year the plan is I will go back to full time working since having the kids. So really we're looking for the next investment and also thinking at the same time how to be in a good position to help the DC when the time comes. I thought this was savings for them but it seems not, I think we just save ourselves and gift them the money when the time is right.

We're also looking at buying a rental property as a pension type investment maybe by this summer.

Trying to work out the implications of the negative interest rates too.

We regularly use and replenish the children's savings for major expenses. Will look into stocks and shares ISAs and see if that's a better option.

We have a mixture of savings in the children's names with a smaller amount in (will probably be around £3k by the time they can access) and I'm comfortable with them having access to that. We also save in our own names into a fund that's designed to help them with house deposits at some point but it's our money and we'll gift it to them. We also do as a pp suggests and overpay the mortgage too although by the time that's due to finish my children will be in their 30s!

We regularly use and replenish the children's savings for major expenses. Will look into stocks and shares ISAs and see if that's a better option.

I'm not sure if the 'use and replenish' mindset is a good one to get into for your children's savings (although if it's just money 'earmarked' in your own accounts then that's up to you) If you're saving in children's accounts in their name to get slightly higher rates of interest, and then using that money, I think that could be frowned upon if it ever came to light.

Be aware with children's (Junior) ISAs that you WILL NOT be able to withdraw money once invested.

My parents saved for me in my name but didn't tell me. We did the same with our DC and have them deposit for a flat money when they'd graduated. They had no idea how much it would be but we did tell them that we had some money for them when they were older.

@Mosaic123

My parents saved for me in my name but didn't tell me. We did the same with our DC and have them deposit for a flat money when they'd graduated. They had no idea how much it would be but we did tell them that we had some money for them when they were older.

Sounds like a sensible option :)

@Mosaic123

My parents saved for me in my name but didn't tell me. We did the same with our DC and have them deposit for a flat money when they'd graduated. They had no idea how much it would be but we did tell them that we had some money for them when they were older.

Do you mind me asking what type of account you used to save for your children in their name and how you managed the period after they turned 18? From my experience this is the tricky part e.g. age 18-25, as all the banks and building societies etc want to hand over responsibility to the young adult at 18. Or did you set up a trust?

I cannot stress this enough - don’t let them have it when they’re 18. We gave eldest DD access to her savings at 18, not massive amounts but nearing 10k. She pretty much spent it all. I know people will say ‘well my child wouldn’t do that’ and fair enough they might not but I hadn’t done anything wrong - she’s very intelligent and savvy and she’d been brought up in a house where the importance of saving had been made clear since day dot. In fact, her father and I are known as the tight-fisted savers of the family who are always squirrelling money away! But she burnt through it. Fair enough she spent most of it on holidays and festivals and travelling so she has wonderful happy memories of that, and I’m really glad about that. But now she’s in her mid 20s and desperately trying to save for a deposit all she ever says is ‘why did you let me have that bloody money!’

@chillybeans

I cannot stress this enough - don’t let them have it when they’re 18. We gave eldest DD access to her savings at 18, not massive amounts but nearing 10k. She pretty much spent it all. I know people will say ‘well my child wouldn’t do that’ and fair enough they might not but I hadn’t done anything wrong - she’s very intelligent and savvy and she’d been brought up in a house where the importance of saving had been made clear since day dot. In fact, her father and I are known as the tight-fisted savers of the family who are always squirrelling money away! But she burnt through it. Fair enough she spent most of it on holidays and festivals and travelling so she has wonderful happy memories of that, and I’m really glad about that. But now she’s in her mid 20s and desperately trying to save for a deposit all she ever says is ‘why did you let me have that bloody money!’

I have no intention of them having full access at 18. I just think that is soooo young and I wouldn't blame them for making unwise choices at that age. It sounds like your DD did learn a valuable lesson from her actions though..

@jollyunicorn83 Most definitely learnt her lesson, as did we for being such idiots and going ‘here’s 10k!’ She is now very much a scrimpy saver like us

[quote chillybeans]@jollyunicorn83 Most definitely learnt her lesson, as did we for being such idiots and going ‘here’s 10k!’ She is now very much a scrimpy saver like us [/quote]
Sounds like a win in the long term