Savings for a Baby

If_My_Pennies_Were_Pounds

Hi everyone,

I have recently found out that I am to be an auntie in May next year. I really like the idea of putting some money away monthly for my niece/nephew and then them having it when they turn 18.

A couple of questions really, is a savings or current account better for this? Should it be set up in my name or the child's name? Is it best to have an account that can't have withdrawels or have access just in case it is needed for some other reason?

Ideally I wouldn't tell my sister that I am doing this as I would like it to be a suprise, however I'm not sure if she would need to consent if it has to be in the child's name?

I haven't decided on the amount I would be saving per month yet.

Thanks for your help in advance, if anyone can see any potential problems with this idea then any comments would be much appreciated!

Pennies x

Reaper

There is no need to tell the parents.

If you are set on a savings account then start with the Child Savings article.

However I would favour investments which ought to give much better growth over 18 years. Here is one of various threads on it if you want to go that route:
https://forums.moneysavingexpert.com/discussion/2723699

You will probably find investments actually easier to manage once set up as savings accounts you have to keep changing banks to get the best rates.

Primrose

My advice is not to tell the parents. What happens if your financial circumstances change for the worse and you have to stop paying into the fund? What happens if a second baby comes along? Will you have the funds to treat that child in the same way as the first child? If you don't, that could cause long term resentment between your two nieces/nephews. What happens if the child turns out to be a druggie? Would you still want to hand over the money at age 18? You could be tying yourself into all kinds of difficult situations here. Also, the parents might have different ideas than you as to what the money might eventually used for? What happens if the child wants to blue it all on an expensive holiday at aged 18 and you would rather the money wasn't released until aged 21 or 25 so that they could use it towards a house deposit? I'd be tempted to keep your good intentions to yourself, wherever you eventually end up investing the money.

If_My_Pennies_Were_Pounds

Thanks Reaper and Primrose.

Primrose you are exactly right, I don't really want to tell them what I'm planning just incase for whatever reason I'm not able to keep doing it long term.

The reason I haven't decided how much I would like to save is purely for factoring in other children that may come along.

I'm not talking about putting loads of money away every month, but just enough as a nice suprise on their 18th/21st birthday.

My own godfather gifted me with a £500 cheque on my 18th and it was such a lovely suprise and I would love to do this for my nieces/nephews.