Saving for Daughter

darthpaul

I would like to open a savings account for my 2 year old daughter which we and other family can pay small regular amounts into. But unlike the government given money I would like to be able to retain control of the account until she is old enough to understand money and use it wisely.

What have other parents done? Its not that I dont want her to have money, just dont want her to blow it all on rubbish and regret it later in life.

MrMicawber_2

You can open an account for her but where you are a signatory, so you have to sign as well as her. If the amount is going to be significant then its quite a good idea doing this - we have done it anyway. Remember to register an R85.

We have tried to instil the value of money into our two and get across the value of saving and spending wisely - it's a tricky one getting the balance right but it can work. We try not to be too painfully nagging though.

It's not a bad idea letting them have a bit of money to be responsible for (e.g. a modest clothes allowance). It can teach a few salutory lessons.

Remember also that she will be limited to £200 (£100 per parent) interest on cash gifts from parents and after this you are liable to tax.

jiggy2

darthpaul wrote: »

I would like to open a savings account for my 2 year old daughter which we and other family can pay small regular amounts into. But unlike the government given money I would like to be able to retain control of the account until she is old enough to understand money and use it wisely.

What have other parents done? Its not that I dont want her to have money, just dont want her to blow it all on rubbish and regret it later in life.

hi, i would recommend that u have a seperate account for funds introduced by parents and other relatives or maintain good details of this. if the interest any funds introduced by parents exceeds £100 p.a. per parent it is taxable on the parents, whereas this doesn't apply to other relatives/grandparents etc

Blowsy

Here's something you might find of interest...

Why don't you set up a stakeholder pension scheme for her? You and other family members can contribute up to £300 gross per month (£234 net).

If you'd started paying £234 per month into a stakeholder scheme when she was born until age 16, the fund would be worth £95,000 when she reached age 16 (assuming growth rates of 7% pa and a 1% annual mgmt charge). Astonishingly, if you then stop payments completely, the fund would be worth c£1.2m by the time she reaches age 60 (assuming same growth rates and charges).

Now the great stuff...
If you don't set up a pension scheme for her and she starts paying into her own pension at age 25 she would need to contribute £900 per month to have the same fund value at age 60!!!

That's the power of compound interest.

If you have any further questions - drop me a PM

MrMicawber_2

jiggy2 - I'm not sure if you read my note above. Both parents can make gifts amounting to £100 of interest each, not between them. So limit is £200. But as you say make a record.

Blowsys idea is good.

jiggy2

MrMicawber wrote: »

jiggy2 - I'm not sure if you read my note above. Both parents can make gifts amounting to £100 of interest each, not between them. So limit is £200. But as you say make a record.

Blowsys idea is good.

thanks. amended my post to reflect it . Personally i like the pension idea myself and have always thought of doing that when i have kids...but i suppose that depends on person to person....with pension no access to funds in the short term

darthpaul

jiggy2 wrote: »

hi, i would recommend that u have a seperate account for funds introduced by parents and other relatives or maintain good details of this. if the interest any funds introduced by parents exceeds £100 p.a. per parent it is taxable on the parents, whereas this doesn't apply to other relatives/grandparents etc

So if the parents pay into a savings account then you pay tax, if its other relatives you do not?

Pension idea is interesting!

Liz_the_Whizz

Just dug out the thread which made me think twice about child stakeholder pension:

http://forums.moneysavingexpert.com/showthread.html?t=376958

greenface

Saving for Daughter



how much does a daughter cost nowadays


mine have cost me a fortune

darthpaul

I don't count its the only safe way

Murphy_The_Cat

There is also the option of saving a regular amount into a S&S ISA each month that is ringfenced for her. Its completely tax free, you retain total control over it and you can start from (IIRC) £25 per month for some funds.