Financial advice for every stage of your child’s life – part 1

Please be aware the below blog is older than 12 months, therefore the information may not be relevant or up to date.

Your children are your babies no matter how old they are and you’ll always want to support them where you can. In this two-part series we look at ways you can help them financially over the years. We start with how to help your children who are under 18.

Open a savings account

It doesn’t matter if they are currently knee high to a grass hopper, if you can save a little bit of money regularly, by the time they hit 18 there could be a tidy sum waiting for them!

As with all savings, the sooner you start, the better. If you were to put £100 a month from their birth into an account paying 5% they would have approx. £35,000 by the time they turn 18!

Be tax-efficient

There are two types of Junior ISAs: stocks and shares, and cash. You can hold one of each, and up to £9,000 can be saved across the two per tax year. There is no tax on the earnings. The money you put in will be locked away until your child turns 18.

• Junior stocks & shares ISAs. Returns depend on the performance of the stocks or shares you've invested in. As with all stocks & share ISAs, they come with risk.
• Junior cash ISAs. What is fundamentally a tax-free savings account. The money is completely safe (as per FSCS protection rules) and you receive a defined amount of interest.

Set up a pension for your child

Yes, this sounds a bit extreme but, if you’ve got your own pension sorted, setting up a retirement fund for your children is becoming increasingly popular

By starting early, you can take advantage of compound interest, where funds build upon themselves. This mean even if you only pay in a for few years early on, the pot will have decades to grow in value.

Additionally, a pension has the added benefit of not being accessible to your children until later on in life rather than at 18, when they may not be quite as responsible as you’d hope!

Educate

You’re never too young to learn about managing money and an early start can help children develop great habits in the future. Ginkgo is an appointed rep of Quilter, who partner with MyBnk, a leading financial education charity. They provide financial education to young people to help them develop the skills, knowledge and confidence to fully engage with their financial lives.

From time to time, we run free educational events on topics such as family finances. These sessions are family friendly events where members of the local community can find out more about key topics, ask questions and meet the Ginkgo in an informal setting.

Make your will

Honestly, this is so important. No matter what age your children are, having a will in place is essential. Whilst they are young, your initial thoughts will turn to child care should the worst happen but you’ll also need to think about setting up trusts and how and when your children will receive any inheritance.

As your children get older you will need to revisit your will. In fact, it’s recommended you review it every five years, and after any major change in your life*.

Ginkgo offers will planning to all our clients. We’ll ask if there have been any significant changes to your circumstances at each annual review just to make sure your will is still fit for purpose.

The financial support doesn’t stop there for parents. In the next part of this series, we’ll look at supporting your children as they prepare to fly the nest and beyond.

In the meantime, if you would like to discuss ways to help financially support your children or would like us to help with your will please do get in touch.

By Daren Wallbank

Disclaimer

Will writing is not part of the quilter financial planning offering and is offered in our own right. Quilter financial planning accept no responsibility for this aspect of our business.
Tax treatment varies according to individual circumstances and is subject to change.
The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.
*https://www.gov.uk/make-will/updating-your-will

Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 02/11/2023