Having children is expensive. The cost of raising a child, in the UK, is around £230,000. But, despite this, it is still very important to put aside some money and save for your child’s future. There are several ways you can do this despite the fact that your finances are likely quite stretched.
Here are a few suggestions for you to look at and consider.
Open a Junior ISA
My first suggestion is opening a Wealthify junior ISA. You can read all about what they have to offer by clicking the link.
It is possible to open either a cash-based junior ISA or a stocks and shares one. Which you choose is entirely up to you. Either way for the tax year of 2019/20 you are allowed to put £4,368 into Junior ISAs for each child.
Grandparents, other relatives and friends can make a contribution too. But, the amount placed into junior ISAs, per year, must not exceed the limit set by the government, for that tax year.
From the moment the money goes into that account, it belongs to the named child. It really is locked away. Withdrawing funds from a junior ISA can only be done under exceptional circumstances. So, you need to be sure that the family is not going to need access to those funds. You should have some other cash set aside for emergencies before tying money up, in that way.
Only when your child reaches 18 can they gain access to the funds. This is good timing because that is when they will need cash to achieve some important milestones. Including, going to university, passing their test or moving out of the family home.
Teach them how to handle money
Putting aside cash for your children’s future is important. But, that is only a small part of the story.
You need to teach your children how to be cash savvy. They need to understand how things work to be able to stay out of debt and make the most of their money.
Setting a good example and teaching them to handle money well is a gift in itself. There is no point in saving up a large sum of money and giving it to them if they just go out and blow it in just a few weeks.
Getting your child a bank account and helping them to manage it at first is a very important step. It enables them to learn how to save up for things in the short term as well as in the long term. Managing a bank account also enables them to learn how to keep track of their money and budget.
Show them how to maximise what they have
It is also a good idea to teach your children not to waste anything. Letting them sell their old toys and make things is a great way to show them how to make the most of what they already have. Let them repaint their old wardrobe if they want to. Doing things like this teaches them valuable skills that they can use in later life to either earn or save money. If you want to learn more about teaching your children how to live frugally, just click the link.