Saving for your children

chickaroonee

I'm currently pregnant with my first child so not quite in this situation yet, but wondered what others do.

I really want to save regularly for this child (and any others we have!) when it's born, it will only be a small amount as we won't have a lot spare, but I think it's important for when they get older and look to go to university, buy a house and all those incredibly expensive things! I also think it would be nice to use it to teach my children the value of money and saving up for things.

So I wondered, for the parents on here who save for their kids, do you do it in your child's name or yours? I do worry about opening an account in my child's name because obviously then I have no control on it which would hopefully be fine, esp if they're brought up to respect money, BUT...

I've seen some people go mad with their childhood savings when they access them at age 18 and I really don't want this to happen. :eek: I went to University with a nice girl, from a lovely family, who just completely lost it when she went to University with all the savings to support her through it, she blew it all in less than a term, and got into loads of debt on top - her parents were absolutely heartbroken, it was literally their savings for her from the last 18 years...

Anyway, just wondered what everyone else does/did?

Marcheline

Hi, you should put the savings in your child's name, otherwise you'll have to pay tax on them if they're in your name. I am concerned about my DD blowing the money when she's 18 too (I would have, God help me!) so what I have done is opened 2 accounts:

1) the Child Trust Fund (the govt. gives you a £250 voucher to start saving for your child) is in my daughter's name (it has to be), which I add to monthly and she will get at 18.

2) a normal savings account, also in her name, but I will not be telling her about it. We have decided that from my daughter's 5th birthday onwards we will pay monthly contributions into this account, instead of the child trust fund. We intend to keep her in the dark about this 2nd account, until we decide she's sensible enough to look after it.

Hope this helps in some way. There's an interesting article here:

http://www.moneysavingexpert.com/savings/child-savings-tax-free

and here

http://www.moneysavingexpert.com/savings/child-trust-fund-vouchers

chickaroonee

Thanks very much, I hadn't even thought of the tax implications, which is a fairly obvious thing to forget!

It's hard isn't it, I want to do the right thing, but not everyone is sensible at 18! I was but then I was quite an odd child (!) but DH probably would have blown it all on musical equipment...(actually I think he would still do that now!!)

Marcheline

Yeah I did actually ask around a few banks to see if I could put the savings in my daughter's name, but retain total control of the account myself. Most of them said they allow it until the child turns 16/18, but then they switch control of the account to the child. This wasn't what I was after though, cos it's when she's at that age I'm most worried about her blowing the money (!)

Hopefully someone will be able to tell you of a bank that will allow this (as that's really what i was looking for too) but if not, it may be that 'hiding' an account from her is the only way forward. It was the only thing I could think of, aside from using my ISA allowance as a 'child savings account' in my name, but that wasn't practical for me.

oystercatcher

I've been putting away the children's family allowance and tax credits to go towards uni etc. I always kept it in my name 'just in case' . One of middle son's friends, a boy from a lovely family has completely gone off the rails taking drugs etc so if money had been in his name it would have been wasted. Fortunately my son didn't want anything to do with this friend once he realised what was happening.

The downside to keeping control of 'their' money is that I am now unexpectedly unwell and unable to work, it's not quite got to the point of losing my job but it could happen. I would be unable to claim income related benefits due to 'my' savings which in my mind belong to the children. So I would have to use up their Uni fund for general day to day expenses. If I now try and transfer money to the children it could be seen as hiding income to claim benefits !!

No easy answers there!

Marcheline

Actually oystercatcher, children's savings over and above a certain amount (I think £3000, but don't quote me on it) DO count for some income assessed benefits, so even if you've put the savings in your children's names, you can come unstuck.

Saving with the child trust fund must be different though, because no-one can get to the money til the child is 18, so the govt mustn't think you should access that money before claiming benefits, like they do with 'easy access' savings accounts.

bugsaboo

Hiya
I've done what #2 has done and will not tell the kids til they go to uni about the cash.
Also this is their uni fund and if they blow it they won't be getting more out of me so hopefully that'll be a good motivator for them!
One tip I have if you're PG is to pay in the child benefit to their savings - you won't notice as you've not had it before IYSWIM and it really adds up quickly.
Thats always assuming that HMG don't bin it soon!

Apricot

My mum has saved all her child benefit since I was quite young. She used some of it as and when it was needed for school trips etc. But when I passed my driving test, she gave me part of it towards my car (I had already saved a fair amount myself & did not even know the savings existed until then). She gave me some when I started uni to buy a laptop, books and clothes (obviously I needed a whole new wardrobe for student life).
Then for my 21st birthday she took me to New York for a week (paid for with savings) - it was an amazing present and all of my friends were very jealous. She plans to do the same for my brother and sisters when they reach 21.

I think this was a great thing to do as I never expected to have this money so when it came it was an amazing bonus and enabled me to do things I would never have been able to otherwise. It was in her name so if she needed it for some reason (although it was only ever spent on us kids) she could access it easily.

Agutka

I grew up in Poland and my parents and grandparents saved generous amounts in all the kids accounts. We all had a few grand for the future. Then the Zloty got devalued and we were all left with something like £11 each. Heartbreaking.
I still have the account open, untouched.

starbump

Our two have a savings account and CTF investment account each. All cash gifts (birthday, Christmas, etc) go into their savings accounts and get paid into their CTF accounts when the bank balance gets to over a hundred or so.

Fair play if you can afford to save child benefit and tax credits. We use it to pay for nappies and baby food and so on. I have lots of things to "spend" spare money on - mortgage, savings, pensions, etc.

jak

My husband and I saved £30 a month in a Halifx childrens reg. saver last year. This was fine but we have now seperated and I am going to try and save £15 pcm from now on. This will be a struggle but hopefully I will be able to manage. I am planning on using this site (as always) to help me save money on my food shopping etc and then I should be able to afford it.
I realise that not everyone has got spare money to put into a savings account for their child but if it's possible then it's worth doing in my opinion.
I am putting the money in an account in his name but when it comes to nearer the time I will prob. put it into an account in my name. I want my son to use this money for something important, not just fritter it away- like I would have done when I was younger.