There’s a well known book called the Art of War, and possibly the best piece of advice contained within its pages is that if you see peace, prepare for battle. In essence, plan for the future, because smooth sailing can become stormy waters in the blink of an eye. While money can’t be thrown at every problem in life, there are undeniably situations in which a hefty wad of cash could help your young son or daughter to progress in life. Think tuition fees. Think cars. Think houses. Perhaps they have a business plan that needs financial backing to get things up and running. Whatever their reason for needing extra zeros on their bank balance as they approach adulthood, you can ensure that most of the money – if not all of the money – can be available by planning ahead now.
ISA (specifically Junior ISAs)
A Junior ISA is so named because it is an individual savings account for juniors (i.e. under 18s). Why bother with an ISA? Well, as they used to say on those old shampoo adverts, here comes the science part. There are two great reasons to get involved with Junior ISAs. First, if your child was born between 1 September 2002 and 2 January 2011, the government at the time would have made sure that a Child Trust Fund was set up in your child’s name. They even started things off with a deposit. How nice. But as welcome a gift as this free sum of money was, the scheme only continues to the child’s 18th birthday, at which point the savings account is cashed out. Now, with a Junior ISA, you’ll benefit from more flexible options (such as withdrawals) and when your child turns 18 the Junior ISA will automatically convert to an adult ISA. That’s what I call super handy tax free savings.
Fake Money – Hands On Experience
I learned this trick from a friend of mine. Ever been in a shop with a young child and been faced with “mum, have I got enough pocket money for this?”, which is followed by an excruciating few seconds while you tot up whether or not little Jilly/Billy does in fact have enough money saved to afford whatever brightly coloured sugary treats they’ve got their eye on? Well, do away with all of that. Don’t give them real money. Give them fake money from a board game. Reds are for sweets, blues are for toys, and so on. They’ll need to save up five of one colour before even thinking about asking to spend their “pocket money”. This teaches patience, the value of money, and lets you decide what qualifies as being the right price (stopping your children from wasting real money on useless over priced nonsense).
Hand Out Raises
Pocket money is a slow process. It can lead to meltdowns because there never seems to be enough pocket money to afford every last one of your little angel’s whims. So do a deal with them. If they can choose something worthwhile to put their pocket money towards, and if they agree to give up on asking for pocket money for everything else, you’ll raise their weekly allowance so that they can afford things faster. This is a great incentive to get children to really think about what they’d like to to purchase, and to understand that saving can only take place if we prioritise and make sacrifices.
Disclosure: This is a collaborative post.