Setting up account for 1 year old...

Choco1208

Hi

My daughter will be turning 1 on Fri. Me and my partner want to open up a bank account for her. Each week were hoping to deposit atleast £50. We will use the money only if required. My partner want to save up for her education (private tuition, travel etc). But, I want to use the money for other things too, for example if we take her on holiday. When we buy a house etc. My Partner feels it is money for her future. However, I feel we should use the money as and when required. I feel in doing so we would have to struggle less, and at the same time we are able give her all the things she needs now!

Anyway. Firstly, I need to set up an account. So my main reason for starting this thread is so I can get some guidance. What do I require to set up her account. Does she have to be included in the banks we use, or can we look elsewhere? Which banks would you recommend? What type of account shall we set up? Someone suggested an ISA account. I don't have any knowledge at all of the different accounts available, and don't know anything about ISA accounts. Oops, I don't even know it's interpretation. Lol.

Please help. And, thank you very much in advance!

sammi.jo

I definitely recommend an ISA.. something that you can access all the time or at the end of x amount of years.

HOWEVER you cannot get an ISA in her name and access it. The funds would be locked away until she reaches adulthood. I think you'd need to get an ISA in your name and then a children's ISA for a little bit of money for when she comes of age.

You can have a standard building society account in her name but she'd have to authorise the money to come out of the account, which would be a nightmare if she turns 13 and decides that you're not getting a penny of it, for whatever reason. Or at least this was the case when I was a child.

Lith

Just open an 'ISA' on your account and use it for ya daughter.


SIMPLE

no need to make an account in her name.

jackyann

I do think that you need a very serious discussion about what you are saving & why.
An account in your daughter's name means that (unless she earns money in her own right or becomes very rich) that she won't pay tax, so useful. Different accounts have different rights of access by parents.
You don't pay tax on an ISA in your own name, and can of course, access it.

So it would be a good idea to do both.

Unless you are very high earners, £50 is a huge amount to put away weekly, so I think you do need to divide it very clearly.
Otherwise something like this will happen: We would like dear daughter to have a holiday, she is too little to go on her own, at least one parent must withdraw the money to go with her. Other parent: you spent money intended for our daughter's education on a holiday!!
Actually dear daughter won't mind if it's a wet & windy camping holiday, if she's got parents who love her & spend time with her.

I suggest that you put a small amount away on a "regular saver" exclusively for your daughter in the future; an ISA you can access intended for her education if necessary; and a "family savings account" for holidays, trips to the zoo, books, computer etc.

Not what you posted for, but this is MSE with a huge range of opinions: Don't plan to educate your daughter privately unless you have an over-whelming reason. Plan to spend as much time as possible enjoying her & encouraging her. Take her to as many interesting places as you can and talk about them. Read to her, listen to her read & tell you stories. Join in every aspect of her school life and let her know that you value everything that she does. Get all your family & friends to do the same and she will be rich indeed.

Snakeeyes21

Choco1208 wrote: »

Hi

My daughter will be turning 1 on Fri. Me and my partner want to open up a bank account for her. Each week were hoping to deposit atleast £50. We will use the money only if required. My partner want to save up for her education (private tuition, travel etc). But, I want to use the money for other things too, for example if we take her on holiday. When we buy a house etc. My Partner feels it is money for her future. However, I feel we should use the money as and when required. I feel in doing so we would have to struggle less, and at the same time we are able give her all the things she needs now!

The bit ive bolded is very upsetting, why would you want to use money you
put away for your daughters future to use on holidays or buying a house?

It seems to me your husband wants to build a little nest egg for your
daughter and you just want a savings pot you can dip in to as and when,
using the excuse that 'its for her benefit' to spend it on a jolly.

If you really are saving for your daughters future put the money in to
something you or your husband are unable to touch and which you
daughter will have access to at 16, 18, 21 etc

Because trust me, once you start dipping in to the nest egg you wont stop,
say if the washing machine or car brakes down, oh we have that money put aside,
we will replace it.. chances are you never will.

Saving for the future of a child whilst giving yourself the ability to dip in to
it is a very bad idea, however good your intentions are something will always
crop up and that little pot will become very appealing.

If you cant afford to put money aside without having to struggle to do it
or have you kid go without to do it, then its a very bad idea.

Her future is a long way off and chances are if you are planning on buying a house
you will more than certainly have some equity you can release later on to give her
a helping hand.

IMO you would be best off putting tha £200 a month towards a mortgage, get it
paid off faster, pay less interest and build up a pot that way, putting it in to bricks
and mortar always has been and always will be a fairly safe bet with the added benefit
that you cant pull out a brick to take down the shops

Choco1208

sammi.jo wrote: »

I definitely recommend an ISA.. something that you can access all the time or at the end of x amount of years.

HOWEVER you cannot get an ISA in her name and access it. The funds would be locked away until she reaches adulthood. I think you'd need to get an ISA in your name and then a children's ISA for a little bit of money for when she comes of age.

You can have a standard building society account in her name but she'd have to authorise the money to come out of the account, which would be a nightmare if she turns 13 and decides that you're not getting a penny of it, for whatever reason. Or at least this was the case when I was a child.

Thank you for replying. That's one thing that frightens me. What if she becomes spoilt knowing she has access to this money that I cannot touch. What if she feels she can take advantage of this situation.

sammi.jo

Choco1208 wrote: »

Thank you for replying. That's one thing that frightens me. What if she becomes spoilt knowing she has access to this money that I cannot touch. What if she feels she can take advantage of this situation.

Well that's the thing.. you can either have it in your name where you can manage it, or have it in her name and trust her to do right with it. You can stipulate the post-16 age that she gets access to the money (I personally agree with 18 or 21 - start of uni or graduation).

You can't have it both ways I'm afraid. If it's in her name, it's hers, end of.

Choco1208

Snakeeyes I know what u mean. I won't save anything if I know that money can be used "when required". I think me and my partner need to come to a solution and agreement together. My partner is planning ahead for our daughter, which is great. But, I'm thinking I want to save for her future. But, at the moment my priority is to build a nest now. Give her all the things she requires now.

I think maybe if we put aside less. And focus on saving up for a house deposit. I would love to buy a house and decorate a bedroom for my girl. Buy a swing for the garden. Etc. Lol. We were discussing where we want to live and bring up our child. At the moment, no place seems safe and secure!

Choco1208

sammi.jo wrote: »

Well that's the thing.. you can either have it in your name where you can manage it, or have it in her name and trust her to do right with it. You can stipulate the post-16 age that she gets access to the money (I personally agree with 18 or 21 - start of uni or graduation).

You can't have it both ways I'm afraid. If it's in her name, it's hers, end of.

Can we have a joint account with her. How does the ISA work? Is it tax free for children.

Choco1208

Lith wrote: »

Just open an 'ISA' on your account and use it for ya daughter.


SIMPLE

no need to make an account in her name.

Oh. I've just seen ur message. Thank you. I might go into my bank tomorrow. How does an ISA work?

sammi.jo

Choco1208 wrote: »

Can we have a joint account with her. How does the ISA work? Is it tax free for children.

Cash Individual Savings Accounts are tax-free accounts that children or adults can have, to save money up to £5,340. You get a decent amount of interest that isn't taxed. You can also put money into shares for another £5k, tax free. So you just put the money in it whenever you want, at whatever frequency you want.

You can have ones where you cannot touch the money without prior permission or one where you can dip into whenever you like. If linked to your bank account you can transfer money between them in seconds.

Your child can have one that she cannot touch the funds of until she is 16 (or 18, I can't remember, but she'll control it at 16).

Key points:
- You get the £10k allowance (5 cash + 5 shares) every tax year. If you don't use the full amount, it won't roll over. You cannot put more than the allowance in the ISA and pay tax on the rest.
- Children will not pay tax on them unless they are amazing and work!
- You often get more interest with accounts that you have to pre-approve for withdrawal.

The best thing to do is look for the ones with the highest interest. Make a few appointments with different banks to see what they can offer you. You don't need to have an account with most banks to get an ISA. I do personally recommend Skipton and Nationwide.

And as you may have guessed from the bolding above, you cannot have a joint ISA.

There are other savings accounts though, where you can have it in joint names so you both have to sign for when she's 18. That might be a better option though I have seen my ex absolutely screwed over by his parent because they fell out. Even though at 16 he'd started to put £100 a month into it. It had to go to court to be settled.