That moment you find out you are expecting a baby, you know nothing will ever be the same. One of the things that will have to change is what you do with your money. If you want to be a good parent, you’ll need to invest in your child’s future. It’s better to start saving money as soon as possible, and you don’t even need to wait for your child to be born. There are many things you should consider when it comes to this matter, and here are four of them:
Open your child’s savings account
You can rely on the services of a bank or maybe a building society, either work, really. We know that underage children cannot sign legal documents, nor can they open savings accounts. However, parents can open a bank account for their kid, and when the child is old enough, they can take ownership of it. If you give your child control of their money it may help them to develop a good savings habit from a young age, which is definitely a good thing. In addition, you won’t have to pay tax on these accounts, unless your child earns more than £100 in annual interest from the money either parent pays in.
Pick a good life insurance policy for your kid
Here’s another suggestion on how to save money for your kid – you can pick a good life insurance policy for them. This is also a good thing because it protects their insurability. It also serves as an investment or savings vehicle for your child’s future expenses, like college and other important things. Many find it a smart financial move, and when children grow up they are thankful to their parents for coming up with this idea.
Most child life insurance policies last their whole life, but you also have an option to get the one that lasts for a set number of years. Furthermore, once you decide in favor of doing it, you’ll need to pick something that can offer you an everyday account with real returns, so you can consider universal life insurance. It’s a great alternative which also comes with a Visa debit card and there’s even an app that you can download.
Learn more about Junior ISAs
Another thing you can do is explore your options when it comes to Junior ISA. Junior ISAs first appeared in 2011 to replace the Child Trust Fund and they are tax-free savings accounts for children and teenagers under 18. We have two types of Junior ISA – cash (not paying tax on interest earned) and stocks and shares (the money is invested, and tax isn’t paid on capital growth). Both types can be used to accumulate a certain amount of money, and the limit was £4,080 in 2017.
If you like this option, know that your child can take control of their account at 16. However, they can’t withdraw their money until they’re 18. They can hold both a Junior ISA and adult ISA between these years, and that will boost their tax-free savings. If you believe your child can manage their money well, a Junior ISA is perfect. However, it’s better to invest your money elsewhere if you don’t think your child will use it smartly.
Consider a trust fund
Trust funds are great because they can hold assets like cash and investments, and they are typically set up by a parent. Here are some tips if you think this is something you would do. You can learn more on this issue, even details like how to deal with money you meant for a child who has a problem such as excessive spending and splurging.
For some final thoughts, we can mention that the minute we find out we are going to become parents we should start thinking about the future of our children. It’s very important to invest in them and save money any way we can. We can always consult banks and we use Junior ISAs or trust funds, so we definitely can be thankful that we have so many options today.