Although children cannot realistically start thinking about inter-generational wealth and contributing to it in their young years, it doesn't mean that it shouldn’t be discussed with them and planned for from the moment you welcome them to the family.
Across the world, young people whose parents and grandparents have thought ahead about their financial future, have reaped the benefits of access that comes with financial security. Imagine two young people looking at university, one with, and one without the financial means already available to them to help pay for tuition fees, accommodation and living costs. They are going to have vastly different experiences. One will be able to dedicate all of their time to learning and enjoying university life, while the other will potentially need to take on the burden of student debt, while juggling the pressure of studying with long hours trying to earn enough on the side to help pay for essentials.
With education and living costs going up, planning ahead from day one into young adulthood can be the simplest step that parents or grandparents can take to give their children or grandchildren every advantage they need to thrive.
Invest in Their Future
As children cannot do it for themselves, it’s up to forward-thinking parents, grandparents or guardians to help do it for them, and it doesn't mean investing your life savings on their behalf.
Many may not realise that starting to save or invest a little in the early days of a child's life, can provide the opportunity for substantially attractive returns over the longer-term.
Start Investing in a Junior JISA
The best option for any parent or grandparent wanting to give their grandchildren a head start is to set up a Junior Individual Savings Account – effectively a Junior ISA. The benefits of a Junior ISA are numerous:
● There are tax benefits, with the account being sheltered from both income and capital gains tax.
● They provide a simple vehicle for saving and investing over the long term.
● Anyone can contribute - you can encourage wider family and friends to add birthday or Christmas money to it, for use in later years.
● Up to £9,000 can be contributed and the money is inaccessible until the child is 18, so it’s safeguarded from impulsive spending sprees.
Whether you start with a little or a lot, a Junior ISA account can contribute a really positive difference in getting started in their young adult life. Learn more about JISA’s
Teach Financial Literacy From a Young Age
It's one thing to save and invest for your children's futures but educating them about the impacts of smart financial planning can also set them up for life.
Conversations with children about finances including budgeting, saving, and investments are important to get them thinking about how money works. The majority of us don’t have these conversations, and it’s not a topic traditionally taught in schools. So how are they to learn? Simple conversations can give your children powerful insights into the power of making money work for them, giving them the advantage in their early years.
Financially literate people typically have fewer debts, manage household finances more easily, and as a result tend to have a greater financial security.
Wise Investment is your long-term financial planning partner, able to help you set goals, learn the best financial strategies, and design investment plans that fit your stage in life and the goals you have for yourself and your children.
Contact us today to get your children the head start they deserve.
The above information is for educational purposes only and is not a personal recommendation or investment advice. If you’re unsure about the suitability of a particular investment, you should speak to an authorised financial adviser. As you probably know, the value of investments and the income from them can go down as well as up, so you might not get back the amount you invest.
We’ve made every effort to ensure the information above is accurate. Content is based on our understanding of current law and practice at the time of writing, which could alter as a result of future legislation. Junior ISA limits are subject to change and the favourable tax treatment given to Junior ISAs may not be maintained in the future. Tax treatment may depend on your individual circumstances. This article is aimed at UK residents.
Wise Investment is authorised and regulated by the Financial Conduct Authority. Our FCA number is 230553. Registered Office: The Great Barn, Chalford Park Barns, Oxford Road, Chipping Norton, Oxfordshire, OX7 5QR. Registered in England 4970458.