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How to give your children the best (financial) start

Investments and gifts for children

Giving your children the best start in life has never been so important as during a time of economic uncertainty. When we see the cost of living increasing at a fast pace, it’s high time to look at saving for the future.

Investing for children is a simple way to secure a financially stable future for them, and you don’t have to break the bank to help them. Savings in your child’s name will receive tax-free interest (up to set limits). 

Where to save your children’s money?

Children can save up to the same amount as adults before they are taxed, so for the 2022/23 tax year that will be £12,570. You can also get tax-free allowances on top of this so a child could save up to £18,570 before being taxed. 

The best way to save tax-free for your child is with a Junior ISA (Individual Savings Account). Some ISAs will give you interest of 2.5%, so make sure you shop around and find the account that suits you best. A child can have one Junior ISA in their name.

The best part? Your child can’t access their account until they are 18, so while you’re saving for their future, they will learn the value of patience and planning. There is also a loophole for 16- and 17-year-olds currently. They can open an adult ISA as well as keeping their junior one until they are 18.

Involve your children!

 

Getting your children involved in saving is a great way to help them learn about financial security and wellbeing. Most banks and building societies have savings accounts for children from the age of seven. Visiting the bank on a regular basis with your kids is a great way to teach them good money habits. 

And if you want to save more, consider premium bonds or saving in a pension plan. Ask your independent financial advisor about ISAs, accounts, and investments to help you and your child plan for their future.

Not sure where to start?

There are lots of great resources out there for you to start your children saving and spending wisely. 

  • Dr Mara Harvey’s book series A Smart Way to Start helps parents educate their children on money matters from an early age. 
  • Go Henry is a prepaid debit card and app that you can put money onto from your account. It teaches kids about financial wellbeing through “Money Missions” that they can take part in.
  • Most banks and building societies have savings accounts for children from the age of seven. Visiting the bank on a regular basis with your kids is a great way to teach them good money habits.
  • The SmartPurse Money School teaches parents how to talk to children about money and start them off buying and saving wisely.

Money habits can start early in children

Transactions happen all around them and they take note of how, as parents, we treat money. Parents play a key role in our relationship to money in adult life.

According to an article written by Kate Hughes in The Guardian, the financial skills of UK under-34s are 16.5% below the national average. It seems like we have a lot to catch up on, especially as financial education has only been added to the curriculum less than a decade ago.

SmartPurse’s own research found that 66% of UK parents do not believe that their children receive enough financial education, but only 1 in 10 parents actively teach their children about pension planning and 1 in 5 teach them about investing. 

It’s never too early to start learning about money. Above all, it’s crucial that it’s fun. All the good habits you are encouraging need a lot of repetition, and repetition can be boring. So, create enjoyable learning opportunities that are ultimately positive experiences. That way, money will signify abundance rather than scarcity.

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