Long Term Saving for Children - WDYD?

bowlhead99

Keep_pedalling wrote: »

The OP does not have the right to lock up the children’s money in a pension. Even if they did so I don’t think it is a good idea when they will have need for funds well before reaching pension age, and sadly there is a chance they will never see the money asnot everyone actually lives that long.

The OP does have the right to lock some of the children's money away in a pension because the OP is providing much of the money (e.g. £100 a month); it's just the occasional £500s from grandparents for birthdays or Christmases etc which belong to the child and rightfully should not be locked away from the child for six decades.

But setting aside the 'legal' or 'moral' side of what could be done with money gifted by parents or grandparents, I do tend to agree that unless the family are sufficiently wealthy to also be able to provide the adult child with university education, travel opportunities, property etc, financial assistance to bring up the child's own family... it can be much more useful to *not* lock the money away until the child's retirement. More practical that the child is able to access lumps of investment money during the main part of their lives in which critical life-events happen (e.g. age 18-60) rather than age 60-100. And perhaps somewhat selfishly, the parent or grandparent is less likely to be able to see their child 'enjoy the money' if it does not get spent for another seven decades.

There is of course nothing wrong a parent deciding to put their own money in their *own* pension with the intention of growing it tax efficiently and gifting it to the child later - that way it would ultimately reach the child earlier than if a pension had been opened for the child itself.

Lokolo wrote: »

Just an additional question for you. How would you feel if your grandchildren took money out at 18 and squandered it?

A few obvious points to make are
(a) with education this may not be as much of an issue as people typically fear - the parents have 18 years in which to educate the child why it's not wise to blow the money as soon as they get it;

(b) even if the parents are not able to make the child super financially-savvy by age 18, they should at least be able to teach the child to be respectful: i.e. parents or grandparents saved long and hard for the child to have this £30k pot, and while it is of course technically the child's money, if the child fritters away more than a few thousand of it on crap, the parent and other relations who have contributed will be really annoyed and certainly less minded to help the child out in future.

So if the child has silly ideas (which you can't stop teenagers having), you can at least teach them empathy and how the older family members would be upset that most of the hard-saved money was supposed to pay for a house deposit or other great opportunities and yet it was blown in a drunken weekend in the costa del sol or las vegas.

(c) is that if both (a) and (b) fail, the child choosing to squander £30k against their parents wishes when aged 18-20 will pick up a valuable life-lesson. Because when they are aged 30 they will be able to look back and think hmm, if I hadn't been so rash and impulsive, I could have already achieved a bunch of life goals, or be well on the way towards having a home of my own or a hundred grand towards retirement etc etc... perhaps I should be smarter with what I do with my money for the rest of my working life.

Hindsight can be a painful lesson but if you have no success in teaching them (a) be smart or (b) be respectful to the people who gave you the gifts, they will eventually figure out (c) for themselves. And if they don't, more fool them. You can bring a horse to water etc.

Keep_pedalling

Lokolo wrote: »

Just an additional question for you. How would you feel if your grandchildren took money out at 18 and squandered it?

Any money we gift is theirs to do with whatever they like. I hope they won’t squander it all, and we will do our best to give them financial guidance well before they actually get access to it, but If they want to want to blow the lot on something like a round the year gap year I am not going to lose any sleep over it.

If it all went on booze and drugs then I would be concerned, not about the money but with the fact that something had gone seriously wrong with their life.

danm

Lokolo wrote: »

Just an additional question for you. How would you feel if your grandchildren took money out at 18 and squandered it?

I do not subscribe the views of others on the board that any money giffted to minors cannot be controlled as it 'is legally theirs"....


if my daughter was not making the correct life choices and i was concerned that access to a substaintial amount of money could cause harm then she would not be getting it - end of story.

eskbanker

danm wrote: »

I do not subscribe the views of others on the board that any money giffted to minors cannot be controlled as it 'is legally theirs"....

if my daughter was not making the correct life choices and i was concerned that access to a substaintial amount of money could cause harm then she would not be getting it - end of story.

The clue is in the word 'legally' - clearly adults can control minors' money but that doesn't affect the undeniable legality of the situation, which is a fact not a view....

danm

eskbanker wrote: »

The clue is in the word 'legally' - clearly adults can control minors' money but that doesn't affect the undeniable legality of the situation, which is a fact not a view....

Absolutely, and I would happily break the law if I deemed it necessary in such a situation......anyway, I realise this may detract from the OPs debate. Apologies.

chelseablue

My son is 5, he has a savings account in his name where any cash/cheques he gets for birthday and Christmas get paid into

I also save monthly for him into a S&S ISA. It's in my name so I have some control over when he gets it

He has almost £8,000 so currently he has more saved than I do

Lokolo

danm wrote: »

Absolutely, and I would happily break the law if I deemed it necessary in such a situation......anyway, I realise this may detract from the OPs debate. Apologies.

Don't be. Actually your view is exactly the same as mine.

I have been very lucky in my life with my finances (not all down to luck mind you!). However, my sibling is at the complete opposite end of the scale.

I agree with the others that the money is his, and is for him. And that is what I would use it for. But if you gave £100 to a 6 year old, is he going to invest that, or is he going to spend it on sweets? Therefore, I always see that the money should be controlled by myself, but make sure the money is for the child, and when I know he understands about, they can have it (obviously nothing wrong with squandering some of it!).

----

Edit, it has turned into a little bit of a debate and although I didn't mean for it to, I was interested in what others do.

Eco_Miser

Lokolo wrote: »

But if you gave £100 to a 6 year old, is he going to invest that, or is he going to spend it on sweets? T

If my six year old self had had £100 to do with as i pleased, it wouldn't have gone on sweets. Meccano perhaps, but probably into the bank. I'm boring like that.

Lokolo

Eco_Miser wrote: »

If my six year old self had had £100 to do with as i pleased, it wouldn't have gone on sweets. Meccano perhaps, but probably into the bank. I'm boring like that.

Exactly how I was. But I would say most people wouldn't also have over 12 years and 20k posts on MoneySavingExpert in their early 30s :rotfl:

capital0ne

Keep_pedalling wrote: »

The OP does not have the right to lock up the children’s money in a pension. Even if they did so I don’t think it is a good idea when they will have need for funds well before reaching pension age, and sadly there is a chance they will never see the money asnot everyone actually lives that long.

Not this old chestnut, in that case just stuck £2,880 pounds in an envelope, seal it and write their name on it with a note saying if you had invested in a pension you could have had x thousand more"

I guess most people would agree - and are happy their dad didn't lock any money in a pension for them!

Wish my dad had locked up some money in a pension for me tho'.