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Results: What is a reasonable sum to save for a child to give them when they turn 18?

Nothing - let the blighters fend for themselves!

19.05% • 8 votes

Nothing - but I do intend to support them with housing, purchases or ad hoc cash gifts

28.57% • 12 votes

£0 - £10,000

23.81% • 10 votes

£10,000 - £25,000

11.90% • 5 votes

£25,000 - £50,000

7.14% • 3 votes

More than £50,000

9.52% • 4 votes

You may not vote on this poll

42 votes in total.

  • FIRST POST
    • Flobberchops
    • By Flobberchops 20th Mar 17, 3:18 PM
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    Flobberchops
    How much to save for a child?
    • #1
    • 20th Mar 17, 3:18 PM
    How much to save for a child? 20th Mar 17 at 3:18 PM
    Hi all,

    Basically I'm wondering what a realistic figure is to aim for when planning a child's savings pot, with a view to providing a lump sum when they turn 18.

    "How long is a piece of string" would be the trite answer, but I'm interested in gauging what other parents of MSE consider a suitable amount.
Page 1
    • Shashy
    • By Shashy 20th Mar 17, 4:52 PM
    • 49 Posts
    • 44 Thanks
    Shashy
    • #2
    • 20th Mar 17, 4:52 PM
    • #2
    • 20th Mar 17, 4:52 PM
    Utterly and totally dependent on personal circumstances. You'll garner nothing from the responses.

    But, since I'm here and I don't want to get back to work, I'll give you mine. I save £50 per child per month, with the intention that after 18 years this will be £10k ish per kid (plus what I hope to be some decent compound returns, making it closer to £20k per kid).
    • AnotherJoe
    • By AnotherJoe 20th Mar 17, 4:53 PM
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    AnotherJoe
    • #3
    • 20th Mar 17, 4:53 PM
    • #3
    • 20th Mar 17, 4:53 PM
    You write as if this question is independent of the wealth and personal circumstances of the person saving. But it clearly isn't.

    You also dont explain why 18. Why not 16, 21 or 26 3/4?

    But I'll sort of play the game. I'm investing (not saving) £62.50 a month (£50 + tax top up) into a SIPP.

    I dont know what it will produce at age 18 and I'm not aiming at that age in particular, I'll take a view at the time. Maybe it will be 16, 21 or 26 3/4.

    Then again, many couldn't afford that much, I am fortunate that i can, and conversely others may be able to put aside 10x that.
    Last edited by AnotherJoe; 20-03-2017 at 4:57 PM.
    • Reaper
    • By Reaper 20th Mar 17, 5:37 PM
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    Reaper
    • #4
    • 20th Mar 17, 5:37 PM
    • #4
    • 20th Mar 17, 5:37 PM
    As above any figures supplied will be meaningless. It depends whether the parents are millionaires or deeply in debt.

    An 18 year old will have plenty of expenses to cover. They may be thinking about a house, car, and univeristy. All the most expensive things just when they have the least. So anything will be welcome.

    The earlier you invest the more time there is for it to grow, so I put the bulk of it in early. I still contribute some each year but that may decline over time.
    • Anthorn
    • By Anthorn 20th Mar 17, 5:53 PM
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    Anthorn
    • #5
    • 20th Mar 17, 5:53 PM
    • #5
    • 20th Mar 17, 5:53 PM
    "How long is a piece of string" is an apt answer for me. I originally started a fund for my son based on fixed contributions and aiming for age 18 to pay for higher education. But due to inflation, I had to keep increasing the contributions. I have a similar problem for myself now in the form of a funeral fund and related funeral costs. Not so very long ago that fund would be £1500, now not much change out of £5K.

    So to recap, cannot quote an amount because it needs constant revision.
    • Flobberchops
    • By Flobberchops 20th Mar 17, 10:00 PM
    • 573 Posts
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    Flobberchops
    • #6
    • 20th Mar 17, 10:00 PM
    • #6
    • 20th Mar 17, 10:00 PM
    Thanks for the responses thus far. I know, there's no "correct" answer, I'm just trying to gauge what's considered normal! Consider it an extension to parents at the school gates comparing the going rate for pocket money or tooth fairy cash.

    Why did I choose age 18? Simply because that's the age money held in bare trust (as in a junior ISA) will become legally the child's.
    • richyg
    • By richyg 20th Mar 17, 10:12 PM
    • 135 Posts
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    richyg
    • #7
    • 20th Mar 17, 10:12 PM
    • #7
    • 20th Mar 17, 10:12 PM
    I have struggled with this one as well. Whilst coming from a fairly well off family I wasn't presented with a balance at 18 , just a choice of do you want to get a job (be rich sooner ) or go to university (be poor sooner but richer later ). Personally being presented with an ISA/savings acct with maybe £20K in it then would have made it even more hard to choose. But if you can put away £50-£200 pcm I think you will be in the top 3% of parents anyway.
    • AnotherJoe
    • By AnotherJoe 20th Mar 17, 11:21 PM
    • 7,394 Posts
    • 7,933 Thanks
    AnotherJoe
    • #8
    • 20th Mar 17, 11:21 PM
    • #8
    • 20th Mar 17, 11:21 PM
    Thanks for the responses thus far. I know, there's no "correct" answer, I'm just trying to gauge what's considered normal!

    Normal for which segment of the population? Considering most people dont even have a few hundred pounds savings, normal would be zero.

    Consider it an extension to parents at the school gates comparing the going rate for pocket money or tooth fairy cash.
    Its a wholly different level though, and is (as said) constrained by what parents can save, unlike the debate about "should" a kid get 10p or £1 "from" the tooth fairy, where income doesn't really make much difference.

    Why did I choose age 18? Simply because that's the age money held in bare trust (as in a junior ISA) will become legally the child's.
    Originally posted by Flobberchops
    That doesn't mean you need to be restricted to that. I think its probably not a great age to be giving someone a large sum of money, do they need it then, or perhaps when coming out of university or finishing an apprenticeship and looking for a job? And being hogtied to give it at a particular age doesn't allow any parental discretion.

    You can also consider the effect it might have upon them before that age if they know they will get it at age 18. Could be unfortunate in all manner of ways.
    Last edited by AnotherJoe; 20-03-2017 at 11:25 PM.
    • Apodemus
    • By Apodemus 21st Mar 17, 7:37 AM
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    Apodemus
    • #9
    • 21st Mar 17, 7:37 AM
    • #9
    • 21st Mar 17, 7:37 AM
    At that age, many years ago, I got 246 MYI shares, which had been purchased over the years with the child allowance money. I've still got them (in a Trigger's-broom sort of way, as they have moved about a bit). The monetary value was not the important bit, it was the understanding of what it means to invest a little bit of money regularly over time and learning the lesson that, for a good investment left alone, in time the growth in dividend can rise to match or surpass the value of the initial investment.
    • Flobberchops
    • By Flobberchops 21st Mar 17, 9:13 AM
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    Flobberchops
    Normal for which segment of the population? Considering most people dont even have a few hundred pounds savings, normal would be zero.
    Originally posted by AnotherJoe
    That's probably true, yeah.

    Although disposable income operates on a sliding scale, expenditures sadly don't - the cost of a car/uni/house deposit starts at a considerable non-zero value! That's partly what I'm trying to get a feel of here; given that life events are expensive, what is a reasonable amount to contribute?

    You can also consider the effect it might have upon them before that age if they know they will get it at age 18. Could be unfortunate in all manner of ways.
    Originally posted by AnotherJoe
    I certainly agree. I have every intention of keeping my daughter's savings top secret until they legally come under her control at 16, as I suspect a precocious pre-teen with the knowledge they have thousands to their name is the very definition of insufferable. She'll have knowledge of, and access to, her own pocket money. I'll be encouraging her to budget and do chores for extra cash and hopefully come to a trial-and-error understanding of the value and nature of money. With any luck she'll have enough money sense that when the lump sum falls in her lap she won't go giddy with the novelty of purchasing power - and if she does, that would be partially a reflection of my failure to teach her.

    But, a bit like a teenager's first forays into driving, alcohol, or sexual activity (all of which could be unfortunate in all manner of ways, probably moreso than blowing a trust fund), I think you've got to accept that "it" will happen at some point and we can't hold back the tides forever. At least with a maturing financial product you have the benefit of a definite date that can be prepared for.

    Anyway, that's just my rambling take on it, I'm only two years into fatherhood so there's a chance my opinion will have completely reversed in 16 years time! (The year 2033... now that's scary).
    • kitjos
    • By kitjos 21st Mar 17, 9:45 AM
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    kitjos
    Does highly depend on circumstance but by the time i was 18 (and my brother), we got £2000 each that was saved by our parents over the years. It was enough for us to buy our first car and help towards insurance costs .

    As for the other stuff (Uni/house deposit etc) - id pick the first option and my kids will have to fund all that themselves. We had no parental help and had to pay for that ourselves. Was had work but managed in the end .

    I use a standing order to put into my DD & DS account monthly (between £10-£15pm) x
    "Don't underestimate the value of financial security"

    (#73) Joint savings account = £8,500 / £10,000
    • cloud_dog
    • By cloud_dog 21st Mar 17, 9:58 AM
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    cloud_dog
    OP, I haven't participated in the poll itself because for all the reasons stated above the options are mute I'm afraid.

    We have a savings account in our child's name which we contribute into occasionally; the idea is that it will provide them with 'some' money (it will not be a large amount ant will be nowhere near £20k mentioned).

    The child also has an account with a debit card (which they deposit gifts / earnings etc) the idea is that from a relatively young age they get used to the concept of 'If I want it I have to spend my money. If I haven't got the money I can't have it'. You'd be amazed how much they decide they don't want after they realise they need to spend their money on it.

    They have a CTF (forerunner of the JISA) which has investments and does have the potential to deliver a significant amount (we / relatives made the account up to £2000 and the investments have done rather well since then). Come age 18 we'll have to hope they are sensible enough to 'deal' with the money.

    We have an investment account in my OHs name which we notionally have assigned to the child 'for their benefit', i.e. university, etc. It is this account that we contribute to so that we can assist or even gift some/all when deemed appropriate/required.

    Following on from this a grandparent wanted to leave a lump sum to the child but I have discussed this and they have a agreed to leave a smaller amount to the child and leave the rest to be held in trust for the child (to be used for the benefit of the child and any remaining money to become the child's at 25).

    There is no one size fits all and I am concerned about children simply 'having money', without the concept of understanding that you have to work for money. There is very much a understanding in the young (very young) of entitlement, something I'm keen to extinguish (as much as possible). You'll never hear the words 'pocket money' in our house. You do tasks, you earn money.

    I'll get off my soap box now
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • Carmk2008
    • By Carmk2008 21st Mar 17, 10:15 AM
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    Carmk2008
    The way young people are today and especially the way they treat money I would be reluctant to give them a lump sum for it to be frittered away on junk and I say this as a parent of an 18 year who has proved this continuously no matter how much we try to guide her that said if she were to buckle down and change her ways I would gladly put a deposit down to help buy a house.
    • Apodemus
    • By Apodemus 21st Mar 17, 8:05 PM
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    Apodemus
    I certainly agree. I have every intention of keeping my daughter's savings top secret until they legally come under her control at 16...
    Originally posted by Flobberchops
    My view is that complete openness on finances is much better.

    In my case (mentioned above), I knew from a young age that the share certificates were there, the number was growing, the letters with the additional dividend shares arriving. I saw them and counted them...and valued having them, even though they were just bits of paper. In due course, I blew my first university grant cheque on a camera, but the thought of selling these shares never once crossed my mind as they had a value way beyond the actual cash value of the shares.
    • MoneySavingUser
    • By MoneySavingUser 21st Mar 17, 9:50 PM
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    MoneySavingUser
    But I'll sort of play the game. I'm investing (not saving) £62.50 a month (£50 + tax top up) into a SIPP.

    I dont know what it will produce at age 18 and I'm not aiming at that age in particular, I'll take a view at the time. Maybe it will be 16, 21 or 26 3/4.
    Originally posted by AnotherJoe
    Your own SIPP or your childrens?

    Presumably, your own as if the children had a SIPP then they can't access the funds until they are 57 so the 16,21 etc. question is moot?
    • Reaper
    • By Reaper 22nd Mar 17, 8:51 AM
    • 6,108 Posts
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    Reaper
    Why did I choose age 18? Simply because that's the age money held in bare trust (as in a junior ISA) will become legally the child's.
    Originally posted by Flobberchops
    I hesitate to mention this but in practical terms it may be possible for trustees of a bare trust (but not a JISA) to delay paying out the money past 18, which they may want to do if the child is acting irresponsibly with money at that age.

    It's a controversial subject which has been debated in depth in past threads.
    • atush
    • By atush 22nd Mar 17, 10:52 AM
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    atush
    For me, the problem with this poll is the age listed.

    I saved for my 3 boys, but I didnt give it to them at 18. they got a free ride to university (all 3) and law school (1). that is what i spent the money on.

    They got 1-2K each on graduation to start them off in life. Now they pay me (rent) if living at home and nothing if they dont.

    I also paid for a small car for them to share and 3x driving lessons. Plus holidays (incl foreign). that is enough I think?
    • edinburgher
    • By edinburgher 22nd Mar 17, 12:10 PM
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    edinburgher
    I gave this topic far too much thought when my daughter was born.

    I wanted to give her a solid start in life, but more importantly enough time to breathe (financially speaking) so that she could find her way without feeling pressured to jump into the first job she was offered/a university course that she was unsure of etc. I'm from a fairly large family and this sort of luxury just wasn't an option!

    We are investing just under the amount that we receive monthly in Child Benefit and also invest cash gifts from grandparents and ourselves. I think that it should grow to £25,000+ by the time she is old enough to be trusted with such a large sum.

    In a lot of ways, I think that saving for children should be a secondary concern to teaching them about how to save their own money, when they get it
    • Anonymous101
    • By Anonymous101 23rd Mar 17, 11:36 AM
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    Anonymous101
    Your own SIPP or your childrens?

    Presumably, your own as if the children had a SIPP then they can't access the funds until they are 57 so the 16,21 etc. question is moot?
    Originally posted by MoneySavingUser

    Why presumably? I thought lots of people started a pension for their children? I don't have children but i'll start a pension for them (if the situation remains as it is now) if/when i do.
    • edinburgher
    • By edinburgher 23rd Mar 17, 11:41 AM
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    edinburgher
    Why presumably? I thought lots of people started a pension for their children? I don't have children but i'll start a pension for them (if the situation remains as it is now) if/when i do.
    Originally posted by Anonymous101
    'Presumably' because Another Joe referred to his child/ren possibly accessing the money earlier than typical pension age (i.e. 18/21, as opposed to 55+).

    While a pension would definitely be a big help for children, I'd rather give them a leg up earlier on in their lives when their earning power will likely be at its lowest. A pension is too inflexible for this.
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