Do you have children, and if so, are you putting any money aside in a children’s saving account for their future? Specifically for them, that is, to spend when they reach adulthood themselves.
Did you know that popping just £25 into a savings account with a 5% annual rate of return would give you £8,700 after just 18 years?
The cost of raising kids
Unfortunately, too many of us just don’t have time to consider the future. All too often we get caught up in the expenses of everyday living. Let’s face it. Raising kids costs, and it costs a lot. They also seem to only get more expensive as they get older. Or maybe it is just that their Christmas and birthday presents just cost more. A wooden train when they are one quickly becomes a bike when they are six.
But we also have to think about setting something aside for them, for when they do eventually leave home. Or as is more likely the case these days, to enable them to leave home.
How to help them in the future
Most parents will open a bank account for their children after they are born. Older children may have a child trust fund account. Younger children could have a Junior ISA. You can pay into them regularly and are able to put away as much as £4,000 a year tax-free.
You children will certainly appreciate your foresight when they are older and they have some savings to use for property or for education.
As you have no doubt seen on the TV and in the papers, the ‘bank of mum and dad’ is now the country’s ninth biggest lender. That means more and more young adults are relying on financial help from their parents for much longer. Well past the time when, in previous generations, young people were supporting themselves.
Why our children will need financial help
A study reported recently in the Guardian showed that one in three, or 31%, of all 25 to 29-year-olds own their own home. Going back to 1990 in that same age group the figure was 63%.
So making savings accounts for your children a priority as soon as possible is a wise idea. It is worth keeping in mind that giving your child a wad of cash though when they do turn 18 isn’t always the wisest idea. There is never a guarantee they will use it wisely. It’s often best to consider an even longer term, looking for bank savings products that will mature when they are perhaps around the age of 25 or 30.
Do you save for your child or children? Are you about to have a child and are thinking about their financial future? Tell us your story in the comments.