Smart savings for your little one
27 October 2014
Written by Siobhan Record, financial advisor.
Having a baby is a massive thing. I know as I went through it for the first time just under two years ago. There is so much you want to get right and ultimately you want the best for your new addition to the family.
Like me you may be thinking of making some savings for your little one and with everything else to think about, this may seem a bit of a minefield in itself!
Hence I thought I’d share with you a little insight into saving, which is based on my professional experience but mostly down to making my own decisions as a Mum!
Firstly and most importantly, save what you can afford. We all want to save a decent amount for our little ones but there is no point saving too much and leaving yourself short. Whilst it is important to save something, don’t go without as a result. It’s important to get the balance right.
Things may well be tight during the maternity period so don’t stress, start the savings once you have settled into your new spending pattern or when you return to work (if this is your plan) and additional income is available.
Have a think about the child benefit you may receive. What is the best use for this? Could all or some of this be saved for the future?
Finally, how do you choose the right savings vehicle? Eek! There are lots out there and I would just bore you trying to explain them all in detail now. The most useful thing for me when I was thinking about the vehicle was to think about the end result. You see some saving vehicles are held in your child’s name and hence when they turn 18 the account becomes their own. Would you feel comfortable with this? If you are ok with this then the big advantage is that the account is in your child’s name and hence there is no tax paid on the interest – ultimately more savings for your child!
Being somewhat of a control freak I decided to save in an account in my own name as for me I am saving for her future, perhaps university or her dream wedding and I am concerned that bad decisions at 18 could jeopardise these opportunities for our savings to help her. Whilst some of us are quite sensible at 18 (I hope she does falls into this category!) we are all different and have different ideas. Who knows the decisions an 18 year old might make!
So what’s your current thinking on saving for your little one? I’m interested to know and maybe I can help you get it right for you and your little one.