Finances for childhood
Being a parent is incredibly rewarding, but it certainly takes its toll on your pocket. Even families with two working parents can feel the pinch.
With an ongoing commitment to provide cash for lessons, clubs, social activities and schooling, as well as basics such as footwear and clothing, the burden doesn’t ease as the years fly by.
It may seem difficult to put money aside when you’re raising a young family, but when your children are ready to set up home, get married or go to university, you’ll want to give them the best start in life. Early planning is advised to ease the process and generate the best returns.
Every child born in the UK after 1st September 2002 is entitled to a £250 government voucher to set up a Child Trust Fund account, which can’t be touched by anyone until the child is 18. Up to £1,200 can be paid into this long term investment each year, which also can’t be withdrawn until the child comes of age.
What’s more, when the child is seven, there’s another £250 gifted to every child’s account from the public purse, with children from lower income families receiving an additional payment. [Disclaimer: these terms may not survive the General Election expected next year]
You are able to choose a straightforward savings account for your child’s money or, alternatively, opt for a slightly more risky option where the money is invested in shares. The latter is said to provide a greater return at 18 than a standard savings account, which will be far from generous. Shares fluctuate in value dependent upon the state of the economy, but are usually the first indicators to rise out of recession.
If you have a little more cash to invest beyond the level that can be paid into your child’s Trust Fund account or you want to save for something specific, such as school fees, an independent financial adviser, who should be authorised and regulated by the Financial Services Authority, will be able to look objectively at your situation and recommend the best course of action.
Remember to check any professional’s credentials before allowing them access to your personal information or following their advice.
An independent financial adviser should be completely unbiased and unaffiliated to any financial institution. They should always put their recommendations in writing to you, selecting from the best financial products on the market at the time.
Sound professional advice will help you plan for your child’s future and maximise the boost you can give them when they’re ready to go out into the big wide world.
Investments can go down as well as up.
