Everybody wants their children to have as secure a future as possible. You know that having to worry about money creates a lot of stress. So, naturally, you want to do everything you can to help them to avoid having to live paycheck to paycheck, once they are older. Here are a few approaches for you to consider.
Set up a junior ISA
Individual Savings Accounts (ISAs) are an interesting way to save. They are an option for everyone. But, if you are building up savings for a child you can find out more about setting up a junior ISA from Wealthify.
The money earned from interest or dividends is tax-free and there is no capital gains tax to pay. But, there is a limit to how much you can invest in this way. For the 2019/20 tax year, the maximum you can invest for each child is £4,368.
Fortunately, there is no minimum amount. So, anyone can get started with saving for their child in this way. Although you do need to understand that the money you put into this type of account is tied up until your child is 18. Effectively, it belongs to your child rather than you.
Teach your children how to be money savvy
Teaching your children how to manage money properly, from an early age, makes a huge difference to how secure their financial future is. A child that knows how to shop around, track what they spend and has the discipline to save will always fair better than one that does not have these skills.
Start a pension for them
Surprisingly, it is possible to start a pension pot for a child. However, this is cash that they will not be able to access until they are in their fifties.
If you are interested in this, it is extremely important to seek advice from an independent financial advisor before doing so. Pensions are complex financial products at the best of times. When you are buying one for a child there are a few more things that you need to consider. The right advisor will make you aware of them and help you to make the best decision.
Buy life insurance
None of us likes to think about what would happen to our children if we were to die. But, it is really important that you do so. You need to put in place a safety net to protect your children should the worst happen.
Buying life insurance is part of doing this. That way if one of you were to die there would be some cash available for your partner to continue to look after your children. They may still need to work, but life insurance can perhaps be used to pay off the mortgage. That, in turn, could make it possible for them to work part-time instead of full time.
It will also make it easier for the surviving parent to maintain a high standard of living for your children. They will be able to continue to save for their future and afford to do things like go to university. You can learn more about buying life insurance by reading this.
This is a collaborative post.