How much to save for a child?

Flobberchops · 20 March 2017 at 4:18PM

Hi all,

Basically I'm wondering what a realistic figure is to aim for when planning a child's savings pot, with a view to providing a lump sum when they turn 18.

"How long is a piece of string" would be the trite answer, but I'm interested in gauging what other parents of MSE consider a suitable amount.

Shashy · 20 March 2017 at 5:52PM

Utterly and totally dependent on personal circumstances. You'll garner nothing from the responses.

But, since I'm here and I don't want to get back to work, I'll give you mine. I save £50 per child per month, with the intention that after 18 years this will be £10k ish per kid (plus what I hope to be some decent compound returns, making it closer to £20k per kid).

AnotherJoe · 20 March 2017 at 5:53PM

You write as if this question is independent of the wealth and personal circumstances of the person saving. But it clearly isn't.

You also dont explain why 18. Why not 16, 21 or 26 3/4?

But I'll sort of play the game. I'm investing (not saving) £62.50 a month (£50 + tax top up) into a SIPP.

I dont know what it will produce at age 18 and I'm not aiming at that age in particular, I'll take a view at the time. Maybe it will be 16, 21 or 26 3/4.

Then again, many couldn't afford that much, I am fortunate that i can, and conversely others may be able to put aside 10x that.

Reaper · 20 March 2017 at 6:37PM

As above any figures supplied will be meaningless. It depends whether the parents are millionaires or deeply in debt.

An 18 year old will have plenty of expenses to cover. They may be thinking about a house, car, and univeristy. All the most expensive things just when they have the least. So anything will be welcome.

The earlier you invest the more time there is for it to grow, so I put the bulk of it in early. I still contribute some each year but that may decline over time.

Anthorn · 20 March 2017 at 6:53PM

"How long is a piece of string" is an apt answer for me. I originally started a fund for my son based on fixed contributions and aiming for age 18 to pay for higher education. But due to inflation, I had to keep increasing the contributions. I have a similar problem for myself now in the form of a funeral fund and related funeral costs. Not so very long ago that fund would be £1500, now not much change out of £5K.

So to recap, cannot quote an amount because it needs constant revision.

Flobberchops · 20 March 2017 at 11:00PM

Thanks for the responses thus far. I know, there's no "correct" answer, I'm just trying to gauge what's considered normal! Consider it an extension to parents at the school gates comparing the going rate for pocket money or tooth fairy cash.

Why did I choose age 18? Simply because that's the age money held in bare trust (as in a junior ISA) will become legally the child's.

richyg · 20 March 2017 at 11:12PM

I have struggled with this one as well. Whilst coming from a fairly well off family I wasn't presented with a balance at 18 , just a choice of do you want to get a job (be rich sooner ) or go to university (be poor sooner but richer later ). Personally being presented with an ISA/savings acct with maybe £20K in it then would have made it even more hard to choose. But if you can put away £50-£200 pcm I think you will be in the top 3% of parents anyway.

AnotherJoe · 21 March 2017 at 12:21AM

Flobberchops wrote: »

Thanks for the responses thus far. I know, there's no "correct" answer, I'm just trying to gauge what's considered normal!

Normal for which segment of the population? Considering most people dont even have a few hundred pounds savings, normal would be zero.

Consider it an extension to parents at the school gates comparing the going rate for pocket money or tooth fairy cash.
Its a wholly different level though, and is (as said) constrained by what parents can save, unlike the debate about "should" a kid get 10p or £1 "from" the tooth fairy, where income doesn't really make much difference.

Why did I choose age 18? Simply because that's the age money held in bare trust (as in a junior ISA) will become legally the child's.

That doesn't mean you need to be restricted to that. I think its probably not a great age to be giving someone a large sum of money, do they need it then, or perhaps when coming out of university or finishing an apprenticeship and looking for a job? And being hogtied to give it at a particular age doesn't allow any parental discretion.

You can also consider the effect it might have upon them before that age if they know they will get it at age 18. Could be unfortunate in all manner of ways.

Apodemus · 21 March 2017 at 8:37AM

At that age, many years ago, I got 246 MYI shares, which had been purchased over the years with the child allowance money. I've still got them (in a Trigger's-broom sort of way, as they have moved about a bit). The monetary value was not the important bit, it was the understanding of what it means to invest a little bit of money regularly over time and learning the lesson that, for a good investment left alone, in time the growth in dividend can rise to match or surpass the value of the initial investment.

Flobberchops · 21 March 2017 at 10:13AM

AnotherJoe wrote: »

Normal for which segment of the population? Considering most people dont even have a few hundred pounds savings, normal would be zero.

That's probably true, yeah.

Although disposable income operates on a sliding scale, expenditures sadly don't - the cost of a car/uni/house deposit starts at a considerable non-zero value! That's partly what I'm trying to get a feel of here; given that life events are expensive, what is a reasonable amount to contribute?

AnotherJoe wrote: »

You can also consider the effect it might have upon them before that age if they know they will get it at age 18. Could be unfortunate in all manner of ways.

I certainly agree. I have every intention of keeping my daughter's savings top secret until they legally come under her control at 16, as I suspect a precocious pre-teen with the knowledge they have thousands to their name is the very definition of insufferable. She'll have knowledge of, and access to, her own pocket money. I'll be encouraging her to budget and do chores for extra cash and hopefully come to a trial-and-error understanding of the value and nature of money. With any luck she'll have enough money sense that when the lump sum falls in her lap she won't go giddy with the novelty of purchasing power - and if she does, that would be partially a reflection of my failure to teach her.

But, a bit like a teenager's first forays into driving, alcohol, or sexual activity (all of which could be unfortunate in all manner of ways, probably moreso than blowing a trust fund), I think you've got to accept that "it" will happen at some point and we can't hold back the tides forever. At least with a maturing financial product you have the benefit of a definite date that can be prepared for.

Anyway, that's just my rambling take on it, I'm only two years into fatherhood so there's a chance my opinion will have completely reversed in 16 years time! (The year 2033... now that's scary).

kitjos · 21 March 2017 at 10:45AM

Does highly depend on circumstance but by the time i was 18 (and my brother), we got £2000 each that was saved by our parents over the years. It was enough for us to buy our first car and help towards insurance costs

.

As for the other stuff (Uni/house deposit etc) - id pick the first option and my kids will have to fund all that themselves. We had no parental help and had to pay for that ourselves. Was had work but managed in the end

.

I use a standing order to put into my DD & DS account monthly (between £10-£15pm) x

How much to save for a child?

What is a reasonable sum to save for a child to give them when they turn 18? 80 votes

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