Planning for the future is always important; particularly for adults who have young children. This is why it is a bit frightening to realise that nearly 10 million households throughout the United Kingdom have no type of savings plan in place whatsoever. Not only is this a dangerous situation if sudden expenses crop up, but we have to wonder about how the future of their children might be affected. So, it is critical to take a look at a handful of ways in which you can set aside a “nest egg” without hampering your current financial liquidity.
Children’s Savings Accounts
You might be surprised to learn that children can legally possess a standard savings account at a bank. While parents will have to set this plan up, a child can gain access as early as the age of seven. These children’s accounts can be used to set a small amount of money aside and perhaps most importantly, they are great ways for your little one to begin learning about financial responsibility. Starting such a habit at an early age will help to ensure that sound decisions are made in the coming years.
A Drop in the Bucket
We should also look at your savings from a long-term point of view. For instance, let’s imagine that you are only able to set aside £10 pounds each month. Assuming that you put this money into an account earning two per cent interest immediately after becoming a parent, you will be able to save up to £2,500 pounds by the time that your child turns 18. In other words, a relatively small financial commitment can go a long way!
Individual Savings Accounts
Most experts also recommend establishing a stocks and shares ISA on behalf of your child. One of the most efficient means to generate an additional source of income over time in this manner is to open a stocks and shares ISA. Not only are these unique platforms managed by industry professionals, but they will often be able to offer a higher rate of return when compared to a standard cash ISA. You might even be able to select which assets are included within a portfolio; an excellent advantage if you happen to possess knowledge of a specific industry or market sector.
A Children’s Pension Plan
Many parents are unaware that they can establish a pension plan for their child at a very early age. Once again, parents are able to contribute as soon as their child is born. The child can then begin managing their own plan when they reach the age of 18. It can be argued that children’s pension plans are some of the most overlooked methods, so it is a good idea to speak with your financial adviser in order to learn more about the available options.
Planning for the financial future of your child is much easier than you think if you keep the recommendations above in mind. After all, life does indeed pass by in the blink of an eye.