Evening out children's savings accounts - help me with maths!

hieveryone

Hello all, 

Today I got to thinking about my children's savings accounts. Over the years I've put away bits and pieces for them but I want to target that now to make sure they have a decent lump sum when they hit 18. 

Currently, they each have £1500 in individual accounts.  

One child is 96 months old and the other is 48 months old. (I've written it in months just for ease!)

If I want to target £10,000 by the time they are 18 (216 months), how do I even up the accounts so that I can input the same each month to each account to hit the target? I don't mind moving money from one child's account to the other to make it even up month wise rather than them both having the same amount. 

Help a girl out, my math just ain't mathing today. 

Thank you! 

eskbanker

If you need to accumulate £8500 in each account, and have 216-96=120 months remaining for one and 216-48=168 months for the other, then the monthly amounts would need to be 8500/120=£70.83 and 8500/168=£50.60.

That total of £121.43 can be split in whichever proportions you like if you're happy to juggle between accounts....

hieveryone

:smile: said:

If you need to accumulate £8500 in each account, and have 216-96=120 months remaining for one and 216-48=168 months for the other, then the monthly amounts would need to be 8500/120=£70.83 and 8500/168=£50.60.

That total of £121.43 can be split in whichever proportions you like if you're happy to juggle between accounts....

That's about as far as I got too - but then I was overthinking it that really, my oldest child should have more in the account as this point in his life, and the youngest should have half as much, because he's the youngest. And that's when it all went to !!!!!!...  Save Draft

daveyjp

If you receive child benefit and can afford it split the total amount and save that.

hieveryone

daveyjp said:

If you receive child benefit and can afford it split the total amount and save that.

Thank you, I don't get it so I am contributing from salaries etc. 

eskbanker

It did seem odd that you were referring to 'evening out' accounts that were already even!

I should have added that in order to model things accurately, the interest rate should be factored in, assuming that you're using accounts that pay worthwhile interest?

hieveryone

eskbanker said:

It did seem odd that you were referring to 'evening out' accounts that were already even!

I should have added that in order to model things accurately, the interest rate should be factored in, assuming that you're using accounts that pay worthwhile interest?

Yes sorry maybe I am overthinking this! 

What I meant was, assuming I'd started saving from the month each of them was born, they would have different amounts by now (as one is double the age of the other). So I started to think, should I even them out now at this stage, so that each month, they both get the same input from now on. 

xylophone

You say that each child is to access the cash at age 18.

You say that each has an  existing (presumably child savings) account.

You say that you (parent) are providing the cash.

You do not say that the accounts in question are JISAs.

You could open a JISA for each child.

https://www.gov.uk/junior-individual-savings-accounts


The best JISA interest rate generally  available (not requiring residence in a certain area)  is offered by Coventry Building Society  (4.95%).

Once opened, you could transfer the £1500  into each account.

You could then add up to £7,500 to each account in this tax year if you wished and up to £9000 to each account in subsequent tax years.

eskbanker

hieveryone said:

eskbanker said:

It did seem odd that you were referring to 'evening out' accounts that were already even!

I should have added that in order to model things accurately, the interest rate should be factored in, assuming that you're using accounts that pay worthwhile interest?

Yes sorry maybe I am overthinking this! 

What I meant was, assuming I'd started saving from the month each of them was born, they would have different amounts by now (as one is double the age of the other). So I started to think, should I even them out now at this stage, so that each month, they both get the same input from now on. 

In mathematical terms, you could simply move £500 from one to the other, so that the elder would have £2K and the younger £1K, in proportion to their ages, but if the money is in accounts in their names, you wouldn't be permitted to do this.

hieveryone

eskbanker said:

hieveryone said:

eskbanker said:

It did seem odd that you were referring to 'evening out' accounts that were already even!

I should have added that in order to model things accurately, the interest rate should be factored in, assuming that you're using accounts that pay worthwhile interest?

Yes sorry maybe I am overthinking this! 

What I meant was, assuming I'd started saving from the month each of them was born, they would have different amounts by now (as one is double the age of the other). So I started to think, should I even them out now at this stage, so that each month, they both get the same input from now on. 

In mathematical terms, you could simply move £500 from one to the other, so that the elder would have £2K and the younger £1K, in proportion to their ages, but if the money is in accounts in their names, you wouldn't be permitted to do this.

Thank you, I don't think that would even out the monthly payments to make them the same each month? 

prettyandfluffy

hieveryone said:

eskbanker said:

hieveryone said:

Thank you, I don't think that would even out the monthly payments to make them the same each month? 

It doesn't need to be the same because you have longer before the youngest child reaches the age of 18 = more monthly payments.  So you could work out the number of monthly payments per child between their current age and when they reach 18 and divide the "gap" sum by that number.  Or if it's easier pay the same into each and just stop when they both reach the desired balance.