Using Adult Savings Account for Child's Savings

MrsLe-Page

Hi all.

Currently, the fixed savings rates for adult savings are a little bit better than any current kids savings. I have an amount of money in a 123 mini account (2%), which I am drip-feeding into the First Direct (adult) savings account (7%) at £300 a month. The FD account is obvs not a children's savings account and that got me thinking whether I am allowed to do this? My daughter is only 4, so we'll be opening many more savings account in her lifetime (we save £100 a month (into another account) for her so she might be able to put a deposit down on a house one day!). I'm quite savvy with moving money around to the accounts with the highest interests, but they won't necessarily be labelled as 'children's accounts'. Is this OK to do? 

Currently, £100 from our monthly income goes into the Halifax monthly saver (which will be 5.5% for me come June), then in June 2024 I will move that cash somewhere else. £300 a month from the 123 mini savings account also goes into the FD adult account, so after the 7% fix finishes, I will need to look around again too.

Thanks.

eskbanker

If it's your money then saving it in accounts in your name is fine, but if it's her money (e.g. gifted from others) then it should be saved in her name.

There are pros and cons - money saved in her name becomes hers to do with as she sees fit when she reaches 18, whereas retaining it in your name keeps control for as long as you choose, but money in your name can affect means-testing, for example, and would be within your estate should the worst happen.

There's also the wider issue of the likelihood of money in savings accounts losing real-terms value to inflation over the long term, so investing is likely to be more productive....

MrsLe-Page

I want it to be my money so that I can give it to her for purchase of a house only! Call me a control freak, but I don't want her getting all this money at 18 haha. I'm glad that what I am doing is OK. My mum (her nan) sometimes gets her premium bonds, not my choice, but she is free to do what she wants.

I'm not brave enough for investing, maybe I will look into it..

Tanks for the help!

Sg28

MrsLe-Page said:

I want it to be my money so that I can give it to her for purchase of a house only! Call me a control freak, but I don't want her getting all this money at 18 haha. I'm glad that what I am doing is OK. My mum (her nan) sometimes gets her premium bonds, not my choice, but she is free to do what she wants.

I'm not brave enough for investing, maybe I will look into it..

Tanks for the help!

Ive just started a pension for my 6 year old son. It might be worth you considering. They still get the 20% tax uplift and potential growth over 50 years means they are likely to have a decent pension pot by retirement for quite a small amount invested now. Im doing £25 a month. 

I wish my parents had had the knowledge and means to do it for me 35 years ago.

FrankRizzo

Sg28 said:

MrsLe-Page said:

I want it to be my money so that I can give it to her for purchase of a house only! Call me a control freak, but I don't want her getting all this money at 18 haha. I'm glad that what I am doing is OK. My mum (her nan) sometimes gets her premium bonds, not my choice, but she is free to do what she wants.

I'm not brave enough for investing, maybe I will look into it..

Tanks for the help!

Ive just started a pension for my 6 year old son. It might be worth you considering. They still get the 20% tax uplift and potential growth over 50 years means they are likely to have a decent pension pot by retirement for quite a small amount invested now. Im doing £25 a month. 

I wish my parents had had the knowledge and means to do it for me 35 years ago.

Brilliant, I didn't realise you could do this - what provider did you use? Does the child not need a National Insurance number before the pension account can be opened?

Thanks

Sg28

FrankRizzo said:

Sg28 said:

MrsLe-Page said:

I want it to be my money so that I can give it to her for purchase of a house only! Call me a control freak, but I don't want her getting all this money at 18 haha. I'm glad that what I am doing is OK. My mum (her nan) sometimes gets her premium bonds, not my choice, but she is free to do what she wants.

I'm not brave enough for investing, maybe I will look into it..

Tanks for the help!

Ive just started a pension for my 6 year old son. It might be worth you considering. They still get the 20% tax uplift and potential growth over 50 years means they are likely to have a decent pension pot by retirement for quite a small amount invested now. Im doing £25 a month. 

I wish my parents had had the knowledge and means to do it for me 35 years ago.

Brilliant, I didn't realise you could do this - what provider did you use? Does the child not need a National Insurance number before the pension account can be opened?

Thanks

I used hargreaves landsdown. But mainly for simplicity as I have my own accounts there. I believe most providers offer them. 

https://goodmoneyguide.com/investing/junior-sipps/#:~:text=We have ranked Hargreaves Lansdown,trusts, ETFs, and bonds

Im not sure if those reviews are independent or if there a slightly better options available but theres some more info there. 

Im using to invest in a global tracker fund. 

wmb194

MrsLe-Page said:

Hi all.

Currently, the fixed savings rates for adult savings are a little bit better than any current kids savings. I have an amount of money in a 123 mini account (2%), which I am drip-feeding into the First Direct (adult) savings account (7%) at £300 a month. The FD account is obvs not a children's savings account and that got me thinking whether I am allowed to do this? My daughter is only 4, so we'll be opening many more savings account in her lifetime (we save £100 a month (into another account) for her so she might be able to put a deposit down on a house one day!). I'm quite savvy with moving money around to the accounts with the highest interests, but they won't necessarily be labelled as 'children's accounts'. Is this OK to do? 

Currently, £100 from our monthly income goes into the Halifax monthly saver (which will be 5.5% for me come June), then in June 2024 I will move that cash somewhere else. £300 a month from the 123 mini savings account also goes into the FD adult account, so after the 7% fix finishes, I will need to look around again too.

Thanks.

The money that's already in accounts where she is the beneficial owner is her money: you transferring it to your own account is stealing.

It sounds like you should just save in your own name and then decide in the future whether or not to gift it to her.

Sg28

We aren't talking about random adults, or random children, we are talking about our own young children who we have given the money to in the first place. 

Until my child is old enough to make his own financial decisions I will make them for him, and if that means pulling money out of a childs saver paying 2% to put it into an account in my own name paying 4% of course I would. You would be crazy not to. 

boingy

MrsLe-Page said:

Hi all.

Currently, the fixed savings rates for adult savings are a little bit better than any current kids savings. I have an amount of money in a 123 mini account (2%), which I am drip-feeding into the First Direct (adult) savings account (7%) at £300 a month. The FD account is obvs not a children's savings account and that got me thinking whether I am allowed to do this? My daughter is only 4, so we'll be opening many more savings account in her lifetime (we save £100 a month (into another account) for her so she might be able to put a deposit down on a house one day!). I'm quite savvy with moving money around to the accounts with the highest interests, but they won't necessarily be labelled as 'children's accounts'. Is this OK to do? 

Currently, £100 from our monthly income goes into the Halifax monthly saver (which will be 5.5% for me come June), then in June 2024 I will move that cash somewhere else. £300 a month from the 123 mini savings account also goes into the FD adult account, so after the 7% fix finishes, I will need to look around again too.

Thanks.

Investing for a four year old with an aim of eventually funding their house deposit has absolutely got to be involve stocks and shares rather than in cash savings accounts. That way you'll almost certainly beat inflation, which you definitely won't do with savings rates. You don't mention whether you have an ISA yourself but the best way to invest for your child is for you to take out an index tracking stocks and shares ISA in your name and throw whatever money you want into it up to 20K per year then gift the money to your daughter when she needs it. Alternatively you could do it in your child's name but she would automatically have access to it at age 18. And you don't have to be brave or have specialist knowledge to invest in a tracking ISA. They are simple and low risk. Ask on here for advice about the best one to choose.

xylophone

The point being made was that the money was originally in an account that was in the child's name and belonged to the child.

It should not be moved from an account in the name of the child into an account in the name of another person.

If a parent wishes to keep total control of any of his own money that he intends to gift to his child at a time of his choosing, he should keep that money in his own name until the time he makes the gift.

Any money given to a child by the parent or anybody else should be held in the child's own name.

wmb194

Sg28 said:

wmb194 said:

Sg28 said:

wmb194 said:

MrsLe-Page said:

Hi all.

Currently, the fixed savings rates for adult savings are a little bit better than any current kids savings. I have an amount of money in a 123 mini account (2%), which I am drip-feeding into the First Direct (adult) savings account (7%) at £300 a month. The FD account is obvs not a children's savings account and that got me thinking whether I am allowed to do this? My daughter is only 4, so we'll be opening many more savings account in her lifetime (we save £100 a month (into another account) for her so she might be able to put a deposit down on a house one day!). I'm quite savvy with moving money around to the accounts with the highest interests, but they won't necessarily be labelled as 'children's accounts'. Is this OK to do? 

Currently, £100 from our monthly income goes into the Halifax monthly saver (which will be 5.5% for me come June), then in June 2024 I will move that cash somewhere else. £300 a month from the 123 mini savings account also goes into the FD adult account, so after the 7% fix finishes, I will need to look around again too.

Thanks.

The money that's already in accounts where she is the beneficial owner is her money: you transferring it to your own account is stealing.

It sounds like you should just save in your own name and then decide in the future whether or not to gift it to her.

Utter nonesense. 

Save in the place with the best rates. 

No, you're wrong, it's their money, not yours. What if you die? It will form part of your estate and they could lose it. Even if you have the best intentions, a child's money is not yours to do with as you please and as a trustee it's beholden upon you to act responsibly.

If I die then he will inherit it. 

You need to use a bit of common sense in situations like this. But if you want to be pendantic and deprive your children of interest its up to you. 

Imo acting responsibly is moving the childs money to gain him the best returns, an extra few percent compounded over 12+ years is a lot of money. Its in his best interests.

Not doing that due to some notional idea that I might spend it on myself in future rather than returning it is just illogical.

There are many other situations up to and including death but anyway, you shouldn't be co-mingling assets. End of. If you want to use accounts that are in your own name you shouldn't gift the money in the first place but instead just earmark it for them and gift it to them in the future.

If you're looking at time horizons of 12+ years you should look at stock market investments so e.g., use a Junior Isa or a bare trust GIA for children such as AJ Bell's offering. If you want low risk and 4%+ you could buy gilts and/or short dated money market funds. You really don't need to use adult savings accounts.