Are you saving for your child?

xylophone

It seems to me that BG are trying to have it both ways?

At all events, I remain unhappy with their approach to the "put any age you like but it's not binding" - it seems to me to lack transparency.

I disagree that I am making a mountain out of a molehill.

However, rather than argue (fruitlessly) with one another about this, shall we agree to differ?

edinburgher

Interesting discussion.

The Millionaire Next Door makes a fairly convincing case that wealthy savers who gift money to their children do them a disservice as the children typically end up with far lower net worth. On the other hand, I fully agree with the poster who said that life is hard enough without withholding support from your children to achieve some of their earlier life goals.

What to do? I had fully planned to save for future children in a JISA, but am starting to waver now.

Has anyone on this thread managed to teach children good money management skills without boring them in the other direction? :rotfl:

atush

Well my oldest has good money managing skills as he has saved over 20K since he graduated and began working a few years ago. He joined his workplace pension immediately as I advised. And he took 2 years at uni to spend the 2K or so he had in his children's savings acct I turned into a checking acct for him once he reached 18.

His younger twin brothers are still at uni, we will see if they have learned their lessons. They like instant gratification, but one of them earned almost 3K this summer and has yet to splurge greatly. I think he bought a game for his ps4, a coffee machine for his student flat, and been to some footie matches.

but of course he may have spent more than I know about. I might find out at xmas lol.

the other twin thinks I penny pinch too much, so I have fears he may not have learned all the lessons I have given.

mandragora_2

I wanted my children to be able to have under a (then) labour government what I'd had under Maggie Thatcher's government, ie a university education without needing to borrow money. We were skint much of the time they were small, but as soon as we had anything spare, it was squirreled away into the best investment accounts we could find. I can still remember the sense of relief (and pride) when the fund hit £32k, which was the amount I'd reckoned they'd need. When the time came, they both chose to go; both activated their student loans (daft not to, it was 'free' loans in those days). As amounts fell due, we released the money they needed, so they both started working life with degrees but without debts. One of the two turned out to be a bit more slapdash with money than the other at first, but within a couple of years of starting work, both had good jobs and a good savings habit. I was so pleased we had been able to do it for them, and they both appreciated it.

For us as a couple, once we'd made our 'pot' for the boys, we kept that savings habit a constant throughout our working lives. We are now in the very fortunate position that I am going to be able to take advantage of phased retirement starting in January, at the age of 55.

planteria

interesting thread.
i am investing into Pensions and my own ISA on the basis that this can be inherited, along with a Regular Savings Plan which can be passed on & also acts as a Life Insurance Policy.
we have also set up a ChildTESP for our 11yr-old, in her name.
i guess a JISA is an option too, and if i set one of these up it would certainly be Stocks&Shares rather than Cash.

xylophone

11yr-old

i guess a JISA is an option too

Does your child not already have a CTF?

https://www.gov.uk/child-trust-funds/overview

planteria

yes, but need to review that. there is some 'history' i need to tidy up

Magsnoodle

Reaper wrote: »

I split it 3 ways. He has a CTF (soon to become a Junior ISA) which he gets at 18.

Next for some money gifted from relatives he has a Bare Trust with Baillie Gifford who (controversially) won't pay out when he become an adult until we parents, who are the trustees, permit it. So what he does with his CTF money will determine when he gets the Bare Trust payout.

Finally we have a child pension for the long term. Sounds daft but:
1) The earlier you start the less it costs
2) He doesn't have to wait until he retires to benefit. He will benefit from having to put less in himself when he starts work and money is usually tight.
3) The investment gets topped up with tax relief even when the child pays no tax.

Hi Reaper,

I too have invested for my little one over a period of time with Baillie Gifford - possibly as a Bare trust too although I am not entirely sure. Most of the money for this came from her Nan and was gifted to her when she was still alive - the rest we pay a small amount monthly into two of the funds. However, I've just had a thought - am I liable for tax on it? Do you pay tax on yours as I have just noted her dividends this half year are quite high?

All of a sudden panicking as think I might owe tax on this. Doh... maybe I need to seek professional advice on this.

Ta xxx

xylophone

For tax reasons, it would have been better to keep money given to your child by parents completely separate from that given by anybody else.

http://www.cii.co.uk/knowledge/personal-finance/articles/investing-for-children-part-two/27555

When reading the above, be careful about the rather casual use of the term "designation" - see http://www.candidmoney.com/askjustin/809/difference-between-designated-accounts-and-bare-trusts

http://www.hmrc.gov.uk/trusts/types/minors.htm

From what you have said, the grandparent made an outright gift to your child and this money was hers absolutely.

It should therefore have been held (whether in deposit accounts or investments etc) in bare trust for her.

Parents can of course make gifts into bare trust but see above re taxation.

Magsnoodle

xylophone wrote: »

For tax reasons, it would have been better to keep money given to your child by parents completely separate from that given by anybody else.

http://www.cii.co.uk/knowledge/personal-finance/articles/investing-for-children-part-two/27555

When reading the above, be careful about the rather casual use of the term "designation" - see http://www.candidmoney.com/askjustin/809/difference-between-designated-accounts-and-bare-trusts

http://www.hmrc.gov.uk/trusts/types/minors.htm



From what you have said, the grandparent made an outright gift to your child and this money was hers absolutely.

It should therefore have been held (whether in deposit accounts or investments etc) in bare trust for her.

Parents can of course make gifts into bare trust but see above re taxation.

Thanks fxylophone for your advice and this is a classic case of someone trying to put money away safely for the future and not fully understanding the consequences of it. My ex is an accountant but obviously not a great one and didn't give any advice regarding this - maybe he was happy for me to take the fall for it and have a nice tax bill for it.

Never mind. I'll seek some proper advice for it now.

Thanks x