Savings - help!

[namechangedforthis101980]

Hi everyone,

We’ve recently had a bit of a windfall, and wondering now what to do with the cash.

We have 85k. Our hope is to use the money to help our two children onto the housing ladder/travel. Financially, we’re fine, so no need to save any for ourselves, but we intend to spend a small amount on the house.

So the children - one is an adult, one is 16. The adult has a LISA and hopes to move out in the next couple of years.

Our first intentions are to top up the eldest’s LISA this year - 4k. However, we then don’t know what to do with the remainder? Youngest has a child trust fund, and on research he can’t have a junior ISA? We also believe he isn’t able to have a cash ISA.

We are aware of premium bonds as we both have them.

Any tips over what to do with the money for now? DH is a high earner, im not.

Would really appreciate any tips or opinions! Thanks

Could you put some in premium bonds for your youngest? Also, you could put some in a high interest savings account for him/her - https://www.moneysavingexpert.com/savings/child-savings-tax-free/. However, it’s likely that inflation will eat into that, so if you’re comfortable with investing, perhaps you could invest it for your child in their name and then give them access to it when they’re an adult?

In terms of other things to consider, have you got an emergency fund set up? If not, I’d suggest putting some of the £85k into that (to have around 3-6 months’ expenses in there).

And if you feel comfortable with investing and won’t touch the money for at least 5 years, I’d suggest investing the rest (anything not for your emergency fund or for your kids).

You could also keep a bit for treats/a nice family holiday (e.g. 5-10%)?

You've said you're fine financially but have you and your husband maxed out your own allowances?

Your 16 year old cannot have both a CTF and a Junior ISA but the CTF can be transferred to a JISA. At 16, he can manage the JISA himself but still cannot access the money until 18.

Thank you both

I’ve got full holding in premium bonds, DH hasn’t as we’ve recently taken a bit out to pay for some house renovations, so we do have an idea to top his up again.

We have a pretty good saving back up ourselves, probably around 9 months of wages, so don’t feel we’d really benefit from holding onto any of it for us, and the person who has given us the money has said they hope we’ll help the children but can ultimately spend it on what we like

Will have a look at that money saving website, thanks for the link @Fandango52

@ItsFineReally, we’ve read about transferring CTF into a JISA, but conscious that’ll mean he’ll suddenly have a lot of money winking at him when he’s 18. I know he will anyway, as he’d have access to anything then, but he knows he’s getting the CTF, and like his brother it will be his to do whatever he wishes, so we’d rather that “whatever he wishes” amount isn’t significantly more. He’s a sensible lad, but who knows what he’ll be like then. Our plan would be to say ultimately it’s his to do what he pleases but we’ve given him this money with the intention of him using it to get on the housing ladder. So for that reason we’d like to keep it separate if we can

I understand keeping it separate, and why I asked whether you'd already used your own ISA allowances. It's then easier to give them money at appropriate times without the risk of them wasting it if they have direct access.

The Junior ISA comment was just to reply to your specific question about your son being able to have one. I believe it's worthwhile transferring the CTF anyway as there's more flexibility in the JISA products but it's not one I have any experience of so wouldn't like to advise on specifics.

First thing to decide is whether you gift the money now to your children and put it in accounts in their own name and they can do whatever they want with it or whether you put it in accounts in your own name and gift them the money in specific circumstances i.e. to fund university, car, holiday, house etc. or a mix of the two.

With the LISA make sure you fully understand when it can be used and whether you child is likely to fall into that category. In some parts for the country it is less beneficial than others as the average price of a first time house is above the threshold you can use the LISA for and you have pay to remove the money from the accounts.

Having thought about that think about timings when the money is likely to be needed and look into a mix of options that would allow you to put the money away for a longer period with potentially better interest rates with some more readily available but not quite as good rates.