Having a child is a wonderful thing, but it can also be hard work. Not only do you have to welcome sleepless nights in your life, you also need to think about the future of your little one. This can require a lot of planning, but don’t worry, the Wealthify team are sharing some tips and telling you what they do to prepare their child’s financial future.
Richard Theo, CEO and Co-Founder
“Our children benefitted from a free Child Trust Fund worth £250 provided by the government. All children born between 2002 and 2011 got one of these but most parents have forgotten about them. It could be a good idea to locate these trust funds and consider transferring them into a Junior Stocks and Shares ISA. Also, you could get your kids a children’s bank account with a debit card - most banks provide these without charge. Then give the kids piles of old junk from around the house and teach them how to sell it on eBay and let them have the proceeds. This teaches the kids valuable lessons about buying, selling, and some key financial concepts, like fees, commissions, and, delivery costs. And don’t forget to warn them of the perils of crypto-currency like Bitcoin!”
Nicholas Wain, Customer Support Leader
“Soon after my son was born, I opened a Junior Stocks and Shares ISA – this was a no brainer for me! If I saved into a normal savings pot, I’d see a holiday offer and think ‘Dylan wouldn’t mind if we used some of his savings for a holiday though, would he?’ Well, actually he might, so I couldn’t take the risk. He is getting a steady amount into his Junior ISA and since the money can’t be touched before he turns 18, his money has time to potentially grow. I love it, and hopefully when he celebrates his 18th birthday, Dylan will buy me a drink using his money. In addition to investing in a Junior ISA, I collect unique 50ps – this is currently centred on Paddington coins as they were released in 2017 when he was born. I thought they’d be nice to keep, and we have also amassed a small bundle of Beatrix Potter ones that we keep in a Peter Rabbit shaped coin vase. They are likely to rise in value by only a small amount, but even if they don’t, they are nice and shiny and it’s still money after all! Finally, I put a high premium on education. Education is like a jet powered hose – cleaning away ignorance with power and permanency. I shall be sending Dylan to school to make new friends and keep him occupied whilst I work. His real education will be at home however and he will learn how to live, love, laugh, and invest over the long-term! There’s no point handing anyone large wedges of cash and saying do what you want. Learning how to be responsible with your own money is the key to financial success. If Dylan is educated to a high level financially and socially, I am sure he will be able to control his own destiny when he one day flies the nest.”
Russell O’Sullivan, SEO Consultant
“We opened child ISAs when the kids were young and started making regular contributions. When they got a little older and mum was back at work from maternity leave, we decided to put the Child Benefit directly into their ISAs every month. And every time they’d receive money for their birthday, Easter, or Christmas, we’d put half of it into their Junior ISAs so it could potentially grow. We’ve managed to teach them the value of money, from about the age of 8. We had a rule: if they broke or lost something, then they would have to buy it out of their own money – needless to say, it didn’t take long before they stopped losing things. Now that they are 10 and 11, half of all their money goes into their Junior ISA accounts. We also set up a monthly Direct Debit from our account to theirs, as did their grandparents. We put in £20 each, grandparents give them £10 each, so they have a minimum of £40 per month going into their ISA accounts each - which looks very healthy now, so hopefully by the time they are 18, they will have more than enough to pay for driving lessons and a small car, go to university if they want to, or travel and see the world!”
Ian Cantlay, Paid Search Manager
“I’ve split Sebastian’s savings into stocks and shares and cash. The cash is in the form of a bank account, and I’ve set up a Direct Debit to automatically take the Child Benefit that we get paid into our bank account, about £80 a month, to go into his. I also transfer money into his stocks and shares account for him, when I can afford to. I buy shares in an S&P 500 tracker, FTSE 250 tracker and shares in big companies that pay good dividends. Finally, any money that Sebastian gets for Christmas and birthdays is split between stocks and shares and his cash savings. Sebastian has more money than me!”
Greg Steel, Compliance Manager
“I’ve set up Junior ISAs for my two boys, so their money can potentially flourish over time. Also, the good thing is that the investment will always be theirs regardless of what the future holds. Hayden is too young, but Elliot is three and can count to 100+ and do basic sums – he clearly has a very high IQ. So, whenever he is playing, it usually involves a shop somewhere and he knows he can only ‘buy’ things if he has money. To get the money, he usually ‘sells’ me something like an ice cream or a sandwich which only he can see… We’ve also got him a few piggybanks that he likes to paint and put on his shelf. He asks for pocket money - only a few pennies - so he can put them in his savings. He hasn’t got much, but he hasn’t used any of it yet!”
Kelly Curtis, Customer Communications Manager
“There are many ways to plan for your child’s financial future. The first thing you could do is save money where you can. For example, try not to buy too many clothes for your new-born. Not only will they grow out of them quickly, you’ll also probably get gifts from family and friends which you can use instead. Once you’ve managed to cut costs, you could start putting money away. Consider saving as soon as you can into a Junior ISA. This could build up and become a nice little nest egg by the time they turn 18. Another way to boost your child’s future is to take advantage of what the government offers. The government website is a great place to find out what you are entitled to and provides lots of advice on how to make a claim. Think about your own health and if you haven’t already, consider getting life insurance. This is to make sure your child will be financially looked after if the worst were to happen. Finally, when your child is old enough, teach them about the value of money. Give them pocket money for doing chores around the house and help them save it. Don’t buy them everything they want, even if you can! That doesn’t teach them anything. Teach them to save instead! Saving for something they want shows them that waiting and working for something you want can be very rewarding.”
Paul Jones, Graphic Designer
“Any pocket money the kids have goes into a bedside piggy bank, and every month or so, we count it out and take it down to the bank to pay in, so they can see their money physically going in. We use an app called Rooster Money that allows you to create accounts for each child and add ‘imaginary’ money into their account so they can keep a track of how much they have left when they spend it. You can add weekly allowances and create savings goals. Parents control the additions and deductions, so when they spend something it takes it out of their account, and they can see their balance going down. In an age where digital banking is everywhere and practically invisible, this is a great tool to show them that money isn’t a bottomless pit! They get paid for any extra chores that they do, like washing the car and mowing the lawn – illustrating the value of working for financial reward. We sometimes dip into their piggybanks to pay for the window cleaner, and when we do. we always leave an IOU note so that when we come to banking their cash every month, we have to add back in what we owe them – they love this bit!!!”
The tax treatment depends on your individual circumstances and may be subject to change in the future.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.