Crucial time to help your young ones get on in life
IT IS NEVER easy to be young but it is particularly tough right now, as the pandemic destroys jobs, student debts spiral and getting on the housing ladder is more expensive than ever. Families are rallying to the cause, so what can you do to help your children and grandchildren get on in life?
Start saving: Setting up a savings account for your children can teach them the value of money and give them a pot of cash for later.
The Halifax Kids’ Monthly Saver, for example, pays 3.50 per cent, 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.
Your child can use that money to fund further education, put down a house deposit, or broaden their horizons through travel. Khalaf said: “Children have a long time to ride out the ups and downs of riskier assets like shares.”
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 thousands in credit card and overdraft debt as a result, according to money-saving 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.”
Teach them how interest can get out of control if you do not pay it off in time, Cohen added.
Support their education:
Pandemic lockdowns have been a disaster for children’s education, so help them play catch-up.
While many parents have had enough of homeschooling, battle on if you can.you can find an extensive list of free online learning sites at Schoolreadinglist.co.uk.
Others are paying virtual tutors to help with homeschooling, while one ground-breaking new scheme could give your child an entire private education online.
Or you could go a step further. King’s College Online is offering GCSE and A-level students full-time online private schooling for £6,000 a year, a third of the price of some private day schools. It is now enrolling for September and chief executive Mark O’donoghue said: “We combine live lectures with smaller learning groups, all embedded in a virtual campus.”
Seek grants and scholarships:
Almost nine out of 10 parents give money to support children at university, with one in five handing over £500 a month.
That is a real burden and half say they cannot afford it. But many students could in fact be missing out on thousands of pounds in support.
Free online database The Scholarship Hub has details of £150million of scholarships, grants and bursaries for students. Many people do not know what is available but this could work in your favour, said founder Karen Kennard: “The lack of students applying means the chances of getting one are quite high.”
Academic merit, financial need, musical and sporting talent, ethnic background, religion, where you live, what your parents do and your career aspirations are all taken into account. Help out with a mortgage: The average first-time-buyer property deposit is now £59,000 – up £12,000 in a year, according to Halifax.
Mortgages director Andrew Asaam said many are struggling to save because they are paying rent at the same time: “Raising a deposit is still the biggest challenge for those looking to get on to the property ladder, but the new mortgage guarantee scheme could be a game-changer.”
This helps creditworthy buyers with a 5 per cent deposit get a 95 per cent loan-to-value mortgage on properties costing up to £600,000, with the Government supporting lenders to reduce risk.
Families should research other options, such as the Help to Buy equity loan scheme, which gives first-time buyers with a 5 per cent deposit an interest-free government-backed loan.
Shared ownership or buying with friends are other options to explore. Mortgage lenders have designed special deals for families looking to help young buyers, including Barclays Family Springboard and Lloyds Lend a Hand.talk to a mortgage broker.
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, said this has a double benefit: “You will see your money help those you love and it could also reduce a future inheritance tax bill.”
Most students are likely to graduate university with a large amount of debt, right at the start of their working lives. “It could make sense to gift money sooner rather than later,” she added.
Young people have a long and hard journey ahead of them.any aid you can give will go a long way.
‘Many university students could be missing out on thousands of pounds in
support’