Help give your kids a stronger start in life
It’s tough being young right now, as the pandemic destroys jobs, student debts spiral and getting on the housing ladder is more expensive than ever. Here are some ideas to help your children and grandchildren get ahead.
START SAVING
Setting up a savings account for your children can teach the value of money and give them a pot of cash for later.
The Halifax Kids’ Monthly Saver, for example, pays 3.5%, as does the Barclays Children’s Regular Saver.
There is no minimum age to open, but the maximum is 15 years old.
Alternatively, you can save up to £9,000 this financial year in a tax-free Junior Isa, either in cash or stocks and shares.
Laith Khalaf, financial analyst at AJ Bell, said too many Junior Isa savers miss out on the long-term growth of the stock market by saving in cash.
“Investing just £50 a month could give a child born today a lump sum of £19,656 at 18,” he said.
TEACH THEM TO HANDLE MONEY
Almost nine out of 10 young people say school did not teach them about money and many have run up debts as a result, according to moneysaving app Student Beans.
Lucy Cohen, co-founder of online accountancy service Mazuma, said parents and grandparents must plug the gap: “Go into the nitty-gritty of the consequences of buying things you cannot afford and becoming too reliant on credit.”
SEEK GRANTS AND SCHOLARSHIPS
Almost 90% of parents give money to support children at university – one in five hand over £500 a month.
Free online database The Scholarship Hub has details of £150m of scholarships, grants and bursaries for students with a whole host of factors taken into account. deposit is now £59,000 – up £12,000 in a year, according to Halifax.
Mortgages director Andrew Asaam said many struggle to save because they pay rent at the same time, but the new mortgage guarantee scheme “could be a game-changer”.
This helps creditworthy buyers with a 5% deposit get a 95% loan-to-value mortgage on properties costing up to £600,000, with the Government supporting lenders to reduce risk.
Other options include the Help to Buy equity loan scheme, which gives first-time buyers with a 5% deposit an interest-free Government-backed loan. Shared ownership or buying with friends are other options to explore.
Mortgage lenders have also designed special deals for families looking to help young buyers, including Barclays Family Springboard and Lloyds Lend a Hand.
MAKE AN EARLY INHERITANCE
Instead of passing on your welfare and inheritance after you die, consider doing it while you are still alive. Zoe Bailey, chartered financial planner at Tilney, says: “You will see your money help those you love and it could also reduce a future inheritance tax bill.”