Do you have questions on financial planning for your children’s future? £200 voucher to be won

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Created for OneFamily

Please note we are no longer taking questions on this Q&A. You can view Nici's answers here

It can be difficult knowing where to start when planning financially for your children’s future. We’ve invited Nici Audhlam-Gardiner, OneFamily Chief Commercial Officer and expert in child and family savings to answer your questions.

• Everyone who shares a question below by 1 March will be eligible for the prize draw.
• One lucky Mumsnet user will win a £200 voucher from a store of their choice
• Nici will be back online in a couple of weeks to answer a selection of your questions.

About Nici Audhlam-Gardiner

Nici is passionate about empowering families to make money work for them, from driving OneFamily’s volunteering efforts with local educational charities to improve life chances, to making sure OneFamily products are accessible and easily understood by all. As a mother of two teens, Nici has navigated (survived!) the early years of juggling work and child care, putting the right financial foundations in place for her children, and is now knee-deep in negotiating monthly allowances and post-exam incentive schemes!

Here’s what OneFamily has to say

'As a member-owned business, we are interested in helping create a better financial future for Britain’s young people. From providing accessible, easy to understand products to awarding education grants and giving extra support to customers who need it, we are focused on Inspiring Better Futures.'

So whether you’d like to know the best ways to invest for your children, how much they will need when they turn 18, or you’re after advice on how to support them to become financially savvy, post your question on the thread below.

Thanks and good luck with the prize draw!

MNHQ
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Sorry @PerrinAybara, I missed the link off my previous answer - the video on stocks and shares is here!

@Rummikub

Where can my dd move her soon to be available child tax fund? How does she access it?

Hi @Rummikub, great questions. Depending on who your child has their Child Trust Fund with, the routes to access will be different. Ours is fully digitally enabled, with the option to transfer it into an ISA, a Lifetime ISA or withdraw, or a mix of all three. Also, they don’t have to make a decision straight away as the money will remain invested where it is – it’s generally a good idea at age 18 to review how this money has performed and decide if investing for the long term is the right choice or if you have shorter term financial priorities to aim for.

@SmileyClare

My son has a One Family account we set up when he was little and added to each year. He can access it when he's 18 (this April).

How does he transfer these savings (around 12k) to his bank when he turns 18? Would you advise doing this?

Hi @SmileyClare, he can do so by registering for Online Account Management on the OneFamily website. Then, when he turns 18, he can tell us what he wants to do with the money. The options are for it to be paid out into his bank account (or cheque if he doesn't yet have an account), or reinvest in an ISA or Lifetime ISA. Depending on his goals, any mix of these options could be right for him.

Moving it into a standard bank account stops it from being a tax-free product, and you can take your time at this point and not rush into a decision. The money stays where it is in its tax-free state until you decide what you want to do with it.

Transferring into an ISA or LISA has the benefit of keeping the tax-free benefit of the JISA in a grown-up account, and the LISA offers an investment bonus if used towards a house (or retirement!).

@JenniferAllisonPhillipaSue

What guidance can you give to parents of disabled children who won't have mental capacity? I believe the govt is looking to simplify the process of accessing their CTF but what are the options post-16, post-18?

Thanks for the question @JenniferAllisonPhillipaSue, this is one that is close to our hearts. For young people who lack mental capacity accessing their savings is not a simple process. Under current legislation parents and carers need to make an application to the Court of Protection, which can be time-consuming and requires the completion of a lot of paperwork. The savings and investment industry recognised that for smaller amounts, such as child trust funds, this process was unnecessarily complex and has lobbied the Government for a simpler solution. As a result, the Government has recently completed a consultation on its proposed Small Payments Scheme, which is looking to better support parents and carers in accessing the young person's funds. The results of this consultation will be known later this year and we are hopeful that it will make the process easier to navigate. However, in the meantime many financial companies, such as OneFamily, have put their own procedures in place to make life easier. So a good starting point would be to contact your provider to find out how they can help you.

@CurtainTroubles

Should we all be encouraged to start pensions for our children from a very young age? My son is 4 and I have recently opened a SIPP for him. I calculated that if I put £10k in it now it could be worth nearly £4 million by the time he’s 65! (Assuming a generous 10% annual interest - my own investments have always exceeded this). Even just adding £25 per month would give hom £1.25 million by the time he retires.

Hi @CurtainTroubles, it's never too early to consider pensions. Pensions you can set up for children present an alternative to Junior ISAs. They also attract tax relief, and have a separate allowance to the JISA allowance. The allowance for a Junior Self-Invested Personal Pension (SIPP) is £3,600 vs. the £9,000 for Junior ISAs. Your Child won't be able to access the money until they are 55, and that’s likely to go up over time. They can take control of where the money is invested from 18. They aren't useful in terms of helping with a house deposit or university, so while thinking about retirement you might also want to think about what they will need between now and then and split the investment. Of course with 50 years of investment ahead, that's a long time to benefit from compound interest!

It is also worth bearing in mind that tax rules and reliefs such as inheritance tax are likely to change between now and your child’s retirement. The amount they might get back when they’re ready to draw on their retirement savings is only a projection, it’s not guaranteed.

@shilohh

We're a low income family with 3 kids and don't have tonnes of money to put away every month. We could manage £50 if that a month for each of them. What would your advise be for people like me? Thank you.

Hi @shilohh, the best advice is to just start. That £50 a month will soon add up. Depending on how old your children are, compound interest will have a chance to make that money really work for your children and give them something they can use when they need it.

@N0va

How can I avoid my child wasting their savings when they get access at 18? Of course, I will aim to teach and encourage but is there anything that can be done to prevent access until they are older?

Hi there @N0va. The short answer is no, you can’t prevent access at age 18. Even in trust arrangements, once someone gets to age 18 they have the right to know if they are the beneficiary.

With cash depressed, stocks and shares are a good option when looking to keep ahead of inflation (although it's not without risk, and value can go down as well as up). Any stocks and shares risk is also on a spectrum, it’s not black and white - look for a product which balances risk in a way you are comfortable with. When it comes to how your child will use their money at maturity, it's worth bearing in mind that the money doesn't automatically get deposited into their account or disappear if not used. The money can simply say where it is while a decision is made on how to use it.

@Asiama

I would be interested in understanding more about paying into a pension for a child. I understand the government will top it up by 20%. What are the things that we should consider?

Hi @Asiama, pensions you can set up for children present an alternative to Junior ISAs. They also attract tax relief, and have a separate allowance to the JISA allowance. The allowance for a Junior Self-Invested Personal Pension (SIPP) is £3,600 vs. the £9,000 for Junior ISAs. Your Child won't be able to access the money until they are 55 (at the moment) but they can take control of where the money is invested from 18. They aren't useful in terms of helping with a house deposit or university. Of course with 50 years of investment ahead, that's a long time to benefit from compound interest.

It is also worth bearing in mind that tax rules and reliefs such as inheritance tax are likely to change between now and your child’s retirement. The amount they might get back when they’re ready to draw on their retirement savings is only a projection, it’s not guaranteed.

@CeeceeBloomingdale

How much should I be saving for university and when should I start? To be honest I already know I’ve left it too late but we didn’t have anything spare previously. Please can you advise how families without significant savings can best prepare for further education.

HI @CeeceeBloomingdale anything you can save now in a child's tax-free savings account, like a Junior ISA in the child's name, will give them access to the funds around University age (18). Besides saving little and often for university, the best preparation is teaching your child good financial sense and budgeting for when they are out in the world.

@TooMuchToblerone

We've done quite well with saving for the DC who are 15 & 13 now. As yet they don't know they have this money which is a combination of regular savings by me and my late parents plus an inheritance. They have a total of around £30,000 each. Due to their ages I'm thinking of how they might choose to use it. Are they best to use it to avoid student debt and leave education in better financial shape, or take student loans and keep the savings for future? Also, will their savings affect their student loan entitlement?

"Congrats on building up such a useful nest egg for the kids @TooMuchToblerone! It's worth bearing in mind that any amounts built up in a Junior ISA or Child Trust Fund will become the children’s when they turn 18 – so it will be their decision how to use the funds, though you can help them make it. It is a difficult decision to know what to do with it – pay off student debt, save for a house deposit or even keep for their retirement. The right answer will be very different depending on their circumstances – and to make it more complicated, student loan rules are changing from 2023, when the threshold earnings at which the graduate student starts repaying this debt reduces, but the rate of interest on the loan goes down. The general principle is that your children would want to use the investment to pay off the highest rate loan – and it may be that a mortgage they take out is at a higher rate than their student loan rate (and the level of their earnings may mean they don’t need to start repaying their student loan for a number of years – if at all).

It’s also worth bearing in mind that they may want to use some of these savings to open up a Lifetime ISA – which is a great way to save a deposit on house. With the Lifetime ISA the government pays in an extra £1 for every £4 saved (up to a maximum £1000 bonus per year). The Lifetime ISA helps keep focus on the savings goal, because the money can only be used for purchasing a house or retirement, with a penalty to pay if the money is used for anything else.

@HouseholdBubblesandEeeeek

My daughter is now a teenager. Where is there a good source of information she can access so she can learn about financial planning that is aimed at her age group? I have talked to her about money and budgeting but she doesn’t always listen to her mother!

Hi @HouseholdBubblesandEeeeek, it's a great question. In their teens, if you can expose your children to your own savings plans, budgeting etc these can become good teachable moments. Compound interest can feel like magic once people understand it, so that's always a good place to start. We also have a few useful articles to help engage them, such as 6 top tips for long-term saving, Are you in control of your spending - or are your emotions?, and Trick yourself into saving.

@KittenKong

When should you start a pension? It would be great to be able to kick off savings as young as possible!

Hi @KittenKong, it's never too early to consider pensions. Pensions you can set up for children present an alternative to Junior ISAs. They also attract tax relief, and have a separate allowance to the JISA allowance. The allowance for a Junior Self-Invested Personal Pension (SIPP) is £3,600 vs. the £9,000 for Junior ISAs. Your Child won't be able to access the money until they are 55 (at the moment) but they can take control of where the money is invested from 18. They aren't useful in terms of helping with a house deposit or university. Of course with 50 years of investment ahead, that's a long time to benefit from compound interest!

It is also worth bearing in mind that tax rules and reliefs such as inheritance tax are likely to change between now and your child’s retirement. The amount they might get back when they’re ready to draw on their retirement savings is only a projection, it’s not guaranteed

@Lindy2

I have some savings already in place for my children. A combination of equities and savings accounts.

However, one of my children has SEN and potentially may not really be responsible enough at age 18 to have full control of the money. She is currently 13.

What are our options for keeping the funds safe for her but not letting her make all the financial decisions until she is able to do so sensibly?

Hi @Lindy2, it's worth noting that for those products which mature at age 18 (Junior ISAs and Child Trust Funds), nothing automatically 'happens' to the funds when the child reaches maturity age. Without an instruction, the money can sit in the account quite happily until a decision is ready to be made.

That said, depending on your circumstances, you may need to take ownership of the funds on your child’s behalf. As we’ve answered in another question, under current legislation parents and carers need to make an application to the Court of Protection, which can be time-consuming and requires the completion of a lot of paperwork. The savings and investment industry recognised that for smaller amounts, such as child trust funds, this process was unnecessarily complex and has lobbied the Government for a simpler solution. As a result, the Government has recently completed a consultation on its proposed Small Payments Scheme, which is looking to better support parents and carers in accessing the young person's funds. The results of this consultation will be known later this year and we are hopeful that it will make the process easier to navigate. However, in the meantime many financial companies, such as OneFamily, have put their own procedures in place to make life easier. So a good starting point would be to contact your provider to find out how they can help you.

@pigear

How much is the maximum you can invest per year in a child's pension? How do you choose between all the options? It all seems so complicated!

Hi @PigEar, the allowance for a Junior Self-Invested Personal Pension (SIPP) is £3,600 vs. the £9,000 for Junior ISAs. They also attract tax relief, and have a separate allowance to the JISA allowance. Your Child won't be able to access the money until they are 55 (at the moment) but they can take control of where the money is invested from 18. They aren't useful in terms of helping with a house deposit or university. Of course with 50 years of investment ahead, that's a long time to benefit from compound interest.

With regards to the options on a pension, each solution will be different depending on your circumstances. If you are feeling really overwhelmed the best suggestion is to only invest in funds you can understand and make sure you have a spread of risk in a collective fund so you’re not overly dependent on one or a small number of companies or industries

It is worth bearing in mind that tax rules and reliefs such as inheritance tax are likely to change between now and your child’s retirement. The amount they might get back when they’re ready to draw on their retirement savings is only a projection, it’s not guaranteed

@MrsFrTedCrilly

Where is the safest place to put money for a child? ISA, bank account or a trust fund thing? Thanks

Hi @MrsFrTedCrilly, there are two things to think about when talking about safety. One is the risk that you might not get back what you paid in or a good return – a bank account returns your balance but inflation eats value, an ISA can also be in cash but can invest in stocks and shares so its value will go down and up and depending when you need to money out, you might not get back what you hope, although it does have a chance to grow. A trust fund is like an ISA. Secondly, you need to check your money is safe if the firm you give it to goes bust and can’t pay you back. All investments and cash accounts are covered by the FSCS up to £85k so if you have more than that it’s wise to spread it around with more than one company that is covered by the scheme. Don’t be tempted by unregulated or overseas schemes unless you’re a very confident investor and you can do your own research.

@Sonata13

What is the best age for a parent to take out a funeral policy to prevent children being financially burdened in the future?

Hi @Sonata13, it's never too early to consider these things. Alongside life insurance, a funeral policy can be a way to ensure those we leave behind aren't burdened. Some funeral policies only become available after a certain age, but the minimum age you need to be is 18. It will be a personal choice, weighing up the planned costs of a funeral, the length of the policy and total costs. Typically, the earlier you start the lower your monthly payments. Consider whether you want something which is specifically to pay for funeral, or a broader protection for the family if you die (a life insurance) - the latter sometimes have a minimum age (often starting at 50 years old) and sometimes will come with an additional free funeral funding benefit as well as the main life insurance. Consider if you will get good value as it may be better just to put some savings away for that purpose, especially if the long term charges on the product mean you will pay a lot more in than the benefit your family receives

Thanks again for all your questions!

Thank you @NiciOneFamily - really useful

Thanks @NiciOneFamily this has made really interesting reading

Really useful answers thank you
Just suggested it to my dd

Hi all. Thanks so much for all your interesting questions on planning for your children's financial future.

The winner of the prize draw is @JoAnnewithanE - congratulations!

Following.

I have CTF account with One family and thinking to transfer funds to ISA. Would you say that ISA is better option as a wrapper then CTF? Thanks

Hi, need a child minder for 1.5 hours on a Saturday morning. Anyone available. Or someone able to come with? It's for cover for a gymnastics club for my 3 year old. The child that needs cover is 6. Based in Stopsley, Bedfordshire.

Thank you for your time.

You didn't answer my question, but ....