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Original poster

Savings for adult children

15 replies

daraghdecember · 14/12/2024 03:44

Does anyone know if it's possible to open a savings account or pension for my adult children that I can pay into for their future. They are 19 and 22, one a uni student, the other just started working in a low paid job.

With a savings account, I'd like to pay in around £30 a month each so it would build up and which they could put towards a house. Alternatively, a pension of some kind might be better.

Is this sort of thing even possible? I'd want it ring/fenced so they aren't tempted to use it for a holiday.

OP posts:
nannynick · 14/12/2024 06:55

They are adults so they need to be involved. As things can be opened online, you could in theory do it all for them but you need to tell them.

Maybe a better approach would be to teach them about financial responsibility.

Direct them to books, youtube videos, podcasts. Get them interested in managing their own finances and learning how to invest.

Youtube:
Damien Talks Money
Meaningful Money
Financial Interest
Mark Tilbury
The Humble Penny
James Shack
Conversation of Money
The Donegans

DogandMog · 14/12/2024 08:27

What about getting them to set up a LISA for buying a house in future? You can pay in £4,000 pa then the government tops up another £1,000… a massive return on investment. Also teach them about compound interest in tandem with regular savings… savings/investments with a 7% return double in ~10 years. Monthly savings, even fairly modest when young, like what they’d spend on a morning coffee & muffin, say £150 per month, will snowball into a tidy sum in 2 - 3 decades. The same works in reverse too for debt, always pay credit cards off in full by the end of the month, have an emergency fund for things like a broken boiler, never buy anything on credit/finance.

Original poster
daraghdecember · 14/12/2024 08:27

Thanks - that's a very useful list. They haven't the money to save atm though which is why I was thinking of putting some away as I do.

OP posts:
Original poster
daraghdecember · 14/12/2024 10:20

DogandMog · 14/12/2024 08:27

What about getting them to set up a LISA for buying a house in future? You can pay in £4,000 pa then the government tops up another £1,000… a massive return on investment. Also teach them about compound interest in tandem with regular savings… savings/investments with a 7% return double in ~10 years. Monthly savings, even fairly modest when young, like what they’d spend on a morning coffee & muffin, say £150 per month, will snowball into a tidy sum in 2 - 3 decades. The same works in reverse too for debt, always pay credit cards off in full by the end of the month, have an emergency fund for things like a broken boiler, never buy anything on credit/finance.

That's a good idea. Can I pay into that for them?

OP posts:
DogandMog · 14/12/2024 11:31

Yes I think so, they’d have to open it first, then anyone could pay in, just make sure the £4,000 limit isn’t exceeded. Also be aware that the max purchase price of a home is £450K (tho’ might go up in future) so if they’re going to be buying in an expensive area of the country they’ll basically be limited to rabbit hutches. If they don’t manage to buy a house, they can only access the money after age 60. Well, they could, but there’s a 25% penalty.

https://www.moneysupermarket.com/savings/lifetime-isas/

airingcupboards · 14/12/2024 12:05

My children have LISAs and they are the only people who can pay into them.

Christmaseason · 14/12/2024 12:06

I gave my DC money to put into LISAs.

Original poster
daraghdecember · 14/12/2024 14:40

Ahh right - so I may have to gift them money and trust them to stick it into a LIsa

OP posts:
Christmaseason · 14/12/2024 14:43

Yes or save it yourself and then gift them the money when that’s need it, I’m doing/have done that as well.

GreyBlackBay · 14/12/2024 14:47

Are you wanting it to be money that they can't access now/soon?

You could add money directly to a LISA or a pension once they've opened it.

mitogoshigg · 14/12/2024 14:59

You can add money to any account but they do have access. If you are genuinely worried about their capacity to make good financial decisions and you are not maxing out your own isa i would suggest saving in your own name

DogandMog · 14/12/2024 15:11

There might also be inheritance tax implications if you die in the next 7 years. This might be out of date by now, but you can only give up to £3,000 per year. If you gift over that amount, it’s counted for IHT purposes, so do check that out.

ClassicalQueen · 14/12/2024 22:00

You should be able to pay into a LISA on their behalf. With Moneybox and Tembo they have gifting options which would work for you.

ClassicalQueen · 14/12/2024 22:00

Just to add they will have to set up the account first.

Saracen · 17/12/2024 01:57

Since you think they are not sensible with money, a LISA could be a bad idea. It is possible to remove the money before the age of 60 without buying a house, but there's a huge financial penalty for doing so.

If this is a concern, put it into a pension instead, and then they cannot touch it. Of course, they wouldn't then have the flexibility to use the money towards a house, but at least they'll be more comfortable in retirement.

If you opt for pensions, check what's available for the employed person via their employer. It may be that the employer matches pension contributions if they go into the company scheme, for example, which would give you even more bang for your buck.

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