Junior ISAs warning – beware using them to save for college funds blog discussion

Former_MSE_Helen

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's "Junior ISAs warning – beware using them to save for college funds – there's a big glitch" Blog.

Please click 'post reply' to discuss below.

AlbaGuBrath

So what's the best way to start a college/house fund for a child now (appreciating the fact the rules are likely to change over the next 18years)? My first child was due on Tuesday (keeping me waiting) and I'm looking to put a set amount a month (£50-100) for a wee fund. I'm confused!

JimmyTheWig

AlbaGuBrath wrote: »

So what's the best way to start a college/house fund for a child now

Do you use your own ISA limit?
If not, just put the money in there.
Keep a note of how much you've put in and apportion interest accordingly if you're using it for yourself and your child.

Then the money will always be yours. You can then choose to use it as a college fund in 18 years time But you don't have to choose to use it on anything you don't think is appropriate.

dtaylor84

I think the main (and obvious) benefit of the child ISA is that you can potentially save up £54,000 in an ISA wrapper by the time the child becomes an adult.

jamesd

One potential significant advantage is that the money belongs to the child. That presumably means that it is protected from benefits means tests and parental bankruptcy. Those are substantial benefits for parents who are poor or who have unstable work or who simply become ill.

The headline benefit is mainly to those parents who are better off but protecting assets is useful to all.

Mary_Hartnell

"...........don't ever treat me like a child".
You have to treat your children as adults when it comes to money, (as from age 11?)
It is a bit like telling them the facts of life.
If they grow up thinking mum and dad have a money tree, the chances are that they will go wild, at the age of 18.

Paul_Herring

Martin wrote:

So you may’ve put money away for their college fund but they may see it as a Ferrari fund.

I keep seeing people banging on and on about this as an excuse for (not) doing something, but see very little backing it up as a 'proper reason.'

Does all this hand-wringing have *any* basis in fact or is it people just being pessimistic?

(Sure, there will be the odd one or two 'bad kids' who weren't dragged up properly, but in general is it a real issue or just people worrying for the sake of worrying?)

kevana

One of my cousins received £48,000.00 when she turned 18. unfortunately her dad died when she was a baby and this was his 'pension'. She dropped out of college and three years later had to get a job as a waitress at a lorry cafe because she had spent all her money - her attitude to her parents was 'you cant tell me what to do this is my money'.

There will be some children who, when given a lump sum of money think weehee party time unfortunately this is not something you can predict when they are young.

My husband and i considered starting an ISA or similar for our son when he was born (born 2001) one of the main things that put us of is the fact that, that money is the child's you cannot touch that money. If i am putting up to £3,000.00 per year into an account i want to know that if three years down the line my husband is made redundant or falls ill and cannot work the money thats been saved could help prevent us losing our home and put food on the table, that at 18 if my child is (touch wood it doesn't happen) taking drugs or runs away or seems inclined to think weehee I dont need further education or a job when I've got all this money I or my husband can access this money. i don't know if this has changed or not but i basically want to know that i have full control over what happens with the money.

Behaviour towards money is for me quite a large issue but equally large is the fact that it is all fine and well saving say up to 3,000.00 a year for 10 years for your child for the future be it education, driving and a car, their own home or whatever but if the family finances change drastically at some point in that child's life it is more important that there is enough money to feed, clothe and house the child.

Paul_Herring

My thoughts being, if you raise your children to have the right attitude towards money while they're growing up, then there shouldn't be a problem, no?

And one would hope/presume that those parents capable of saving £3,000+ a year for their child would at least take some interest in that sort of education.

N1AK

Or as one parent once said to me about CTFs, but still applies now: ‘My baby is cute now, but what if they become a drug addict and when they’re 18 want to use the cash to put it up their nose not to pay for university?’ – there’s nothing you could do to stop it.

Parent's like this aren't giving their children the money. They are saving money themselves, which they may, in time, give to a child. They then want to complain that they can't get tax breaks for it!?

How exactly do they expect such a system to work? If they aren't obliged to give the money to the child, how can they possibly use the childs tax-free allowance? What would stop parents keeping £6k+ a year tax free, and then not giving it all (or even any) to the child?

A two parent, two child family could put £12,000 into savings pa, using their childrens allowance (£216,000 + interest over 18 years), and then keep it.

N1AK

kevana wrote: »

i don't know if this has changed or not but i basically want to know that i have full control over what happens with the money.

A perfectly reasonable point of view. You shouldn't however be entitled to an additional £6k pa of tax-free allowance purely because you have a child (which is what you effectively have if the money can remain 'yours').