Money Moral Dilemma: Should I save up child benefit to give to my children when they're older?

MSE_Kelvin

This week's MoneySaver who wants advice asks...

I have two children - aged one and four - and receive child benefit for both, totalling about £140 a month. I've been using it for their general living expenses, such as clothes, clubs and so on, but I've started to wonder if it's their money to decide what to do with. Should I be putting it in a savings account each month until they're old enough to decide, or is it OK to continue spending it on them as I have been?

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SnowyywonS

It's not for them in later life, it's a benefit to make your life easier as they grow up. Continue as you are.

ptrichardson

Its supposed to be for exactly as you've done - to help cover the day to day costs of raising children.

But if you can afford it, it can be a nice way to build a sizeable savings pot for them when they reach an appropriate age. Such as Uni costs, first car, house desposit etc.

Its what we've done with our kids - £200 per month into a VGD 80/20 fund.

NurseMoneySaver1122

As above, it is intended to help with living costs. But I agree, if affordable, it is a nice way to save for their future.

Although, may I ask @ptrichardson What is a VGT 80/20 fund?

Ed264

Ditto the above - with emphasis on 'If you can afford it'.

Raghelp

Why not do both. keep a note of what you spend on them, or set a good estimate and put the rest aside for them. I would make a stipulation though about what they can spend it on. I would sugest a deposit for a house, Car, Uni etc.

mark_cycling00

£140 a month spent in childhood can have a much bigger impact than £140 a month spent on expensive craft beers as an adult.

Do something that inspires them now

ClaraSais

I do both - spend on them but also set up a savings acc where a monthly DD goes in of a small amount, which they can't touch until they're 18 :)

Edace2020

I've started saving the child benefit about 3 years ago, when we finally managed to get out of debt. Trying to save it in the highest paying interest savings account we can find and now I'm starting to research investing options for the lump sum, somewhere like a Vanguard fund mentioned above.

Spendless

Can you afford to not touch it? I had to use it for day to day expenses and then the rules changing in 2013 and DH's compnay car meant we had to start paying it back anyway (not all of it but each year his wages went up we received less). That's worth considering IF your incomes ever go up to the means tested bit.

However if I'd been in a position to always be able to put it away, then I'd have done so, not for the kids when they grew up but to pay for their University living costs. That's the biggest expense we've ever had if they don't get maximum loans and you need to top up. In the event they don't go to Uni or have a degree paid for by their employer I'd use it for other big expenses that can come as they're older such as driving lessons.

jacquifef

It's meant to help you with the costs of their living. It is paid to you (not them) because you are caring for them. There are issues with trying to save it for them - not least the fact that you are not receiving the same amount for each child, so it's hard to consider it "their money".

I would keep on as you are - make the (now about £160/month) benefit part of your monthly budget to spend on your household. My two children take up at least that much in food, clothing, energy, clubs and more, so you shouldn't feel that it is being wasted by using it for its intended purpose. I think that the children's financial future (car, uni, house deposit) is best served by parents setting themselves up to be ready to help with those expenses in the future, such as by keeping out of debt, paying off their mortgage early etc. If you have no mortgage when children reach 17-18 you will be able to put what was a £600-1200 monthly payment to use for their benefit. Having a monthly chunk is probably better than a lump sum which can quickly run out in the hands of a teenager- remember, once it's in their name, they can do what they want with it!