How much recommended to put into a Child/Kids bank savings account? 3 February at 12:17AM in Savings & investments 12 replies 397 views

Theresonly1

Thinking of opening a Kids/Child bank saving account for my baby after when born. 
Wanting to stash away some money for the child as future savings for the child to use.

Typically, how much is recommended to put into the child savings account per month? or another way of phrasing my question is what ratio of your income/affordable budget should you ideally allocate to it?

MX5huggy

Not much. My kids have Savings that will amount to a cheap car (but not the insurance for it), or a nice holiday at 18. If they blow it that’s fine. 

Child savings are bit of a minefield, the money is theirs, so you end up in a pickle if you need it to feed the family. Junior ISA’s lock money away till 18 but what if they have an expensive hobby at 16? Just use your own ISA. Then if they receive more than £100 of interest on money parents have given them that interest is considered to be earned by the parent for tax purposes. 

Albermarle

Theresonly1 said:

Thinking of opening a Kids/Child bank saving account for my baby after when born. 
Wanting to stash away some money for the child as future savings for the child to use.

Typically, how much is recommended to put into the child savings account per month? or another way of phrasing my question is what ratio of your income/affordable budget should you ideally allocate to it?

Although a nice idea to have some savings specifically for your child, probably best not to use too much money that could be better deployed elsewhere, such as improving your or your partners pension position, or maybe overpaying the mortgage. Probably better for the child that you/the family is in a good secure financial position when they get older, than whether they have a specific savings pot. Especially as they will have full access to it at 18, which may not always work out.
If you do want to go ahead, then due to the long time scale involved, you should look at a stocks and shares Junior ISA.
This one is often mentioned as the platform charges are waived for a JISA. Junior ISA | Invest in a Junior Stocks and Shares ISA | Fidelity

mebu60

MX5huggy said:

Not much. My kids have Savings that will amount to a cheap car (but not the insurance for it), or a nice holiday at 18. If they blow it that’s fine. 

Child savings are bit of a minefield, the money is theirs, so you end up in a pickle if you need it to feed the family. Junior ISA’s lock money away till 18 but what if they have an expensive hobby at 16? Just use your own ISA. Then if they receive more than £100 of interest on money parents have given them that interest is considered to be earned by the parent for tax purposes. 

We did similar. Daughter had a few k that was hers to do with as she wished. Bought a car at 17.5 which we contributed to (we basically bought car, she paid insurance!) then we gifted car to her at 18 which was subsequently sold and added to her university fund (she had been working at a hardware store during her A-levels amongst other things). Was a way of 'giving' her money that was then hers so more likely to be used wisely. Seemed to work out well. 
During her younger years our focus was on stabilising family finances and reducing mortgage which paid dividends later.

daveyjp

All down to how much you can afford.

Saving child benefit is one option.  Just over £1,000 a year at the moment.

welshman83

Just to give you an idea, I put £100/month ino Childs S&S Isa in a cheap global tracker.

I know that when DD turns 18 that this will become her Money to do with as she likes, we just hope we bring them up sensibly enough that they don't spend it all on drugs and hookers and waste the rest of it.

Exodi

welshman83 said:

Just to give you an idea, I put £100/month ino Childs S&S Isa in a cheap global tracker.

I know that when DD turns 18 that this will become her Money to do with as she likes, we just hope we bring them up sensibly enough that they don't spend it all on drugs and hookers and waste the rest of it.

Drugs and hookers might be an extreme example, but takeaway and nights out every weekend would not be a suprise.

That said, £100 per month with 5% growth is about £35k so I'd certainly be hoping that a big chunk of it gets used on a deposit for a house.

Unfortunately I don't think I'm as trusting as you - when I was growing up I'd seen all my brothers and sisters go mad when they hit 18.

km1500

If you truely mean a bank savings account then the amount is zero

Inflation over the years as the child gets older means you might as well throw pound notes in the refuse bin

Exodi

km1500 said:

If you truely mean a bank savings account then the amount is zero

Inflation over the years as the child gets older means you might as well throw pound notes in the refuse bin

Thanks for your input km1500.

We will all give our children nothing because inflation exists.

With the exception of last year, investment returns typically outpace inflation.

xylophone

If OP is  gifting money  (outside JISA) to his child's interest bearing/dividend paying account, be aware of the £100 Rule.

https://forums.moneysavingexpert.com/discussion/comment/79816452/#Comment_79816452

Albermarle

Exodi said:

km1500 said:

If you truely mean a bank savings account then the amount is zero

Inflation over the years as the child gets older means you might as well throw pound notes in the refuse bin

Thanks for your input km1500.

We will all give our children nothing because inflation exists.

With the exception of last year, investment returns typically outpace inflation.

There have been many many years, when investment returns have been negative, never mind beating inflation.

However we all hope that over a long period of time, the average investment returns will beat inflation.