Why You Should Open A Savings Account For Your Child
Anyone who has a child will tell you they are one of the greatest joys that life has to offer. They will make you laugh, smile and love to degrees which you never thought possible. Having a child is also one of the biggest financial commitments you will ever make. One thing that might get overlooked during this amazing but stressful time is the need to open a savings account for your child!
Most new parents soon get hit with the hard financial reality of raising a child. As your child starts to grow and constantly needs new things it can get even harder. Although opening a savings account for your child might be hard to contemplate at this financially difficult time of life, opening a savings account could be one of the best and most loving things you can do to give your child a head start at a vital transitional point in their future life.
Do you have to put lot of money into a savings account?
Obviously the more you put into a savings account for your child the more they will receive when it matures, but you don’t need to invest a lot of money to make a difference to your child’s future! Junior Stocks and Shares ISAs let you start saving from just £10 a month with the flexibility to raise or lower the payments as you see fit. You can also stop paying into the account if things get a bit tight and restart payments when your finances improve.
If you feel you can afford to save more and are hoping for better returns on your investment the child bond from Scottish Friendly lets you start investing from just £25 a month.
What could a savings account do for your child in the future?
The evidence of how difficult life can be for a late teen trying to make their way in the world is all around us. The cost of learning to drive, buying a car and then insuring that car is far higher than it has ever been. When it comes to finding somewhere to live, the large deposits required by mortgage lenders are making life very difficult for young people trying to get a foot on the property ladder. To top things off job prospects for young people are poor to say the least and university tuition fees in the UK have risen substantially in recent years.
Just think what a difference opening a savings account for your child could make to their future! A savings account that could be accessed by a child at a future time you specify, could help them to make their start to adult life on a secure financial footing, rather than starting it off in a cloud of debt.
Your child could use the proceeds of a savings account to purchase or insure their first car or pay towards a university education, both of which would improve job prospects. A few of my friends from school used the money they received from their savings account to start their own businesses some of which are very successful today. A savings account for your child could also help them to get a foot on the property ladder saving them thousands of pounds in dead money that would otherwise be paid to a landlord in rent.
Should I invest in a Long Term child savings account?
This question can only be answered by asking yourself an important question. Am I the type of person who would dip into a savings account if the money could easily be withdrawn?
When it comes to saving money we all start off with great intentions. Unfortunately though, many of us are also very bad at saving! Ask yourself honestly, when I’m short on cash could I be tempted to dip into my child savings account with the intention of putting the money back at a later date? We all know that 9 times out of ten your child savings account will never see that money again and you might well be tempted to do the same in future! If you are this kind of person it might be wise for you to invest in a child savings account or bond that doesn’t allow you (or your child!) to easily access the savings until they reach a set age of 16 or 18 for example.
Why I won’t tell my child they have a savings account!
I’ve made the personal decision not to tell my children they have a savings account until it matures. Firstly I don’t want it to affect their attitude to saving, I think if my child knows they have some savings coming, they might not make the effort to save for their own future. I also wouldn’t want them boasting to their friends about their savings account. I didn’t have a savings account set up for me when I was a child and it was a bit annoying hearing my friends describe how they planned to spend the proceeds of their accounts when I didn’t have one. The main reason though is that I want to see the look on their faces when they get handed the cheque!