If you are currently raising children, you don’t need us to tell you how expensive that can be. 🧒💷 When you start a family, you take on certain responsibilities. It is up to you to ensure their present and future financial well-being. While it is a sentimental and practical thing, the practice of saving money and investing for your children’s future also requires a fair amount of technical knowledge. But where should you start?
How sustainability plays a part 🌍
We believe it is vital to understand sustainability to start saving right. Sustainability is the concept of meeting the needs of the present without compromising the future generations ability to meet their needs. Simply put, when you spend your resources in a way that ensures your children (and even their children) do not face a shortage.
Sustainability has three main types:
Let’s take a quick look at economical sustainability and what that means. You are considered economically sustainable when you strike the balance between spending 💷 and saving. Spending to make sure your kids lead comfortable lives is essential but so is saving for their future. School/college fees, vehicles and an overall well-rounded lifestyle is what we’re all looking to provide for them. But these things cost serious money. So how can you start actively saving up?
Putting aside money 🏦💷
How you want to invest in children’s future is entirely up to you. One thing to keep in mind is that doing this should not put your own future in jeopardy. Your savings, pension etc. also require adequate funds and attention.
There are few ways to view this but you can look at your current spending, savings for yourself (and partner if need be) and then savings for your kids. Saving for a child or children is an incredible gift for their future. Getting involved early can not only help them in the future, but also help them learn important lessons about money and savings. There are many ways to invest or save for them, but here a few:
- Piggy bank
It can be as easy as a little piggy bank to help your young children save. This is a very simple and quick way to get started. This doesn’t have to last years or until they’re 18, but it’s a nice way to help them understand from a young age.
- Bank accounts
Children’s savings accounts usually offer excellent interest rates and several other privileges that are well suited for long term savings. You can start with as little as £1 in the account for any child aged up to 18. And when they reach the age of 7, they are able to manage their own account. This can help them get into the habit of saving.
Be sure to contact your bank manager and explore different savings options that cater to child savings. Many of these accounts allow you to name your children as nominees.
- Building societies
We believe building societies are an often overlooked savings option. A building society is a financial institution that offers savings schemes, credit loans and investment opportunities. They are similar to a credit union (which means the members completely own them) but are more legally organised. We encourage you to find out more about your local building societies.
- Junior ISA
Junior ISAs are a great savings option because there is no tax on the interest they earn. They are ‘tax efficient’ because they are free from Income Tax and Capital Gains. The account is opened by a parent or guardian, but funds are the child. However, they cannot withdraw any money until after they turn 18. special trust fund-like accounts for people who are not eligible for trust funds.
Child Trust Funds still exist, but you can’t apply for them anymore as the government scheme is now closed. If you or your child has one, they can transfer it to a Junior ISA or once it reaches maturity, it can be cashed in or transferred to an adult ISA.
Putting money or assets aside for your kids is another great option. With our will writers at JPEP, you can put a trust within your will for only £249. This used to be for the rich and famous, but with ever increasing property values, it is becoming a necessity for almost every homeowner in the country. No matter how much your estate is worth, it’s about whether you are concerned about the inheritance you are leaving behind as well as Inheritance Tax (IHT). With children, adding a trust can also be the only way to ensure your children are protected from a real threat we call sideways disinheritance.
What else can you put aside for your kids? 🤔
In many cultures, it is a tradition to set aside some gifts or possessions for the future generation, and it doesn’t have to be a prized heirloom that has been passed down in your family for generations. It can be a simple item that holds immense sentimental value for your family works just as well. We highly recommend putting aside a gift/possession for your children if you can.
Want to know more? 💭
Securing your children’s financial future is a continuous process. And at Bequest, we recommend you read about savings and financial options and closely compare them before making your decisions. If you’re looking to secure your future as well as theirs, getting life insurance is a great option. We can help you make the best choices for you and your loved ones, so if you have any questions let us know!