Now that you have got that joyful, much anticipated visit from the stork, it is your inevitable right to have worries that keep you up all night. From nappies to soothers, clothes that fit for a few months, to toys only enjoyed for a week; expenses for your children might make it look like everything may fall apart before your baby even reaches the age of 3! They say the best things in life are free, but are they really?
This may not be your first time at parenting and you may well be aware that bringing up a child can be as costly as it is so magical. It all will happen in the blink of an eye! Soon, you will be spending for pre-school supplies, then some primary education, then college, the university, and maybe even the wedding party.
So as to say, you will definitely need a long lasting plan to ensure the youngsters’ future with regards to finances because you may not be able to always support them financially.
Saving up for your children isn’t just for their own good but also yours because it will allow you the financial freedom when you need it the most and you may want to get on that Caribbean Cruise for a week and not worry if all your family members have a slice of bread and cheese to eat at home.
What are my best options then?
Guaranteeing a solid financial fund for the newcomers of your family comes in various options. Some conventional, like a standard savings account or a Childs Trust Fund and others more new fashioned, like investing into property or real estate. It doesn’t matter if the actual piggy bank you are filling up has the name of your family members on it right? As long as there is enough for everybody!
You can open a savings account on behalf of your little one and once at the age of 7, they can take it over, learn about saving and manage their own money. This option will give them the chance to take out the money whenever they want in the future. However, just like with everything that is related to money, this will come with some taxes on the interest paid. This interest is calculated depending on how much you promise to invest each month and on the parents’ income.
Another option available in the U.K. is a Child Trust Fund or a Junior ISA. But remember, you can’t have both at the same time so you would have to stick with one.
Recent legal briefs in the country ruled that parents who have already been saving up for their children via a Childs Trust Fund can transfer these accounts into a Junior ISAs. The interest rate on this account is paid tax free, but no withdrawals are allowed until the child’s 18th birthday, except in cases of death or terminal illness.
The broader your look at the matter of ‘saving up for children’ the better!
While the 2 options above seem to be most preferred and heard of choices available; you might want to consider investing in a booming industry like property. One option is to go the old-school way and save everything up under your own name until it’s time for them to get shares as stated in your will. This requires just a little more preparation because you will need to consider all kinds of possibilities from your family being separated to an unwanted departure of an elderly person.
When you choose to think outside the box and decide to give your children something tangible in the future; make sure you have the right paperwork arranged here with the help of a professional advisor. This is just to protect the family and to prevent disputes arising in the future. In the case that your family structure has to undergo any of these unexpected changes along the way, you will definitely look back and appreciate that. This applies first and foremost if you choose to go the property route. Investing in property comes in much less hassle and tax burden compared to all your other savings options but it has its bits and bobs.
Although it may not seem like a legit money saving system for a younger individual of the family, property market ups the value way more than any bank would do on your monthly £50 savings. If you can manage it wisely, it has quite a big chance of paying off in the future. There are some downsides to keep in mind though! You must manage the investment until your child is old enough to take that responsibility. Therefore, even if you chose to transfer it to their name, keep some interest in it, staying within legal limits, just to be on the safe side. There will be some tax matters on buying and transferring a real estate too, but it is all up to you when you decide it is time for your children to take over their investment.
When it comes to putting money aside for the future, do what your current finances allow you to do! Don’t underestimate using your funds wisely. If you are considering a certain option, do extensive research on it before you dive into anything too quickly!
Don’t take anything for granted because good parenting is not just for today, it’s for tomorrow, and for the day after that and for as long as you can be there for your pack!