How and Why to Save for Your Child’s Future

Want to put some funds away to secure your child’s financial future? Many parents, grandparents and guardians put money aside each month for everything from their teenager’s university fees or driving lessons, to a deposit for a first property. Saving for your child’s future is a great gift to them, but it’ll also serve as an important life lesson.

When you put money away on their behalf, you can teach your child the importance of saving, getting them involved along the way, so they are better able to make healthier financial decisions when the time comes.

Children’s Savings Accounts

If you haven’t already done so, you might want to set up an account on behalf of a child. You can do this at a bank or building society and the child can usually begin to manage their own account from as young as age seven.

Helping them learn more about money and how to manage it, a children’s savings account may set up your child for life, showing them how to save and why it’s important. Many providers will offer incentives to sign up – a little gift for your child, usually a money box they can display proudly on their bedroom shelf.

You can start a children’s bank account with as little as a £1 – and the account can be set up for any child up to the age of 18.

With two main types of accounts to choose from – instant/easy access or regular savings – it’s worth doing your research. The former means your child can withdraw cash or deposit funds anytime, while the latter encourages children to save for a certain amount of time (a year, for example).

Here at Unity Mutual, we have a children’s savings plan which is focused on long-term growth. It also offers the potential of additional tax-free bonuses too, based on the investment performance of the funds.

If you’re thinking of opening a savings plan for a child, here are some things you should know:

• You can save a fixed amount – of between just £9 and £25 per month for the child – over a period of 10 years.
• You can get your money back before the 10 years if you need to, as long as at least a year has passed. However, be aware that you may receive less than you originally paid in.

Junior ISAs

If you’re looking for a tax-free way to save for your child, a Junior ISA could be the way to go. Again, you only need to invest as little as £1, but you and your son or daughter can watch the funds grow over the years, which will help set them up for managing their money (and feeling confident enough to do so) later on.

At Unity Mutual, our Stocks & Shares ISA may have a daunting-sounding name, but it may provide a smooth and stress-free way of ensuring your child, grandchild (or even niece or nephew) has the perfect head start when they reach 18.

Help them invest money now and they will have a vital financial boost when they need it – when they’re heading off to university, for example. While that may seem a long way off, saving now – and starting small by putting aside a little each month – is never a bad idea.

Benefits of the Junior ISA include:

• Tax-free savings
• The option to pay in as little as £10 per month
• Low interest rates – they are currently (May 2021) at a record low.

Want to find out more about our Junior ISA? Head here for all the details. You can transfer your existing children’s ISA to Unity Mutual, too, if you want. Just click the link above for more info.

Child Trust Fund

You may have heard the words ‘Child Trust Fund’ before, but perhaps you’re not quite sure what they mean. Well, if your child was born between September 1, 2002, and January 2, 2011, they may have an existing Trust Fund with us, or with another provider.

A simple, tax-efficient way to build up a lump sum for your child or children, a parent, grandparent or another family member or friend may have put money away on behalf of a child. Though new registration for Child Trust Funds has ended, if you have a Trust Fund, you can transfer it to us, if you wish.

Of course, we can’t give you advice on what to do with your money; we can only offer factual information – but all your questions should be answered via the link above. As ever, do let us know if you have any more queries.

Keen to know more about any of the savings accounts and plans we’ve laid out in this piece? Do not hesitate to get in touch with the Unity Mutual team here on the site.

 

If you need financial advice

If you’re in any doubt about whether this product is right for you, it’s a good idea to talk to an Independent Financial Advisor (IFA). You can find a local financial advisor by visiting  www.unbiased.co.uk. You may need to pay for a financial advisor’s help, so make sure you ask them about their fees first.

Terms and conditions apply to our Junior ISA. For more information read the product’s Terms & Conditions and the Junior ISA Key Information Documents.