feature in collaboration with Wealthify
When I look to the future there’s so much I want for my girls.
I want them to have careers that inspire and excite them, and make them want to jump out of bed in the morning. I want them to have friends that make them laugh so hard their ribs ache and they can’t catch their breath.
I want them to always stay close, and to understand how lucky they are to have each other and to get on so well (most of the time). I want them to find partners who also realise how amazing they are, who will love and look out for them as much as OH and I do (if that’s possible).
Finally, I want them to be financially secure, because a healthy bank balance brings more opportunities and greater peace of mind. Money might not buy happiness, but being stuck at home worrying about paying the bills isn’t much fun either!
Millennials have been nicknamed ‘generation rent’ because the rising cost of home ownership has priced many first-time buyers out of the market. It’s definitely something I worry about for the girls, as it took me 33 years to buy my first flat in London, and even then it was only possible because I got made redundant from my magazine job and put the payout towards my five percent deposit.
Unfortunately for my girls, house prices have continued to soar while pay packets have stagnated, which means by the time they’re ready to buy their own property it will be even harder for them to manage without a hefty amount to put down.
Which is why OH and I decided when the girls were just babies to help them get on the ladder when the time comes.
We started by investing the child trust vouchers they were given at birth into a Child Trust Fund, then OH and I added what we could each month – sometimes it was only £20, but even small amounts added up surprisingly quickly. This year I’ve been working hard to streamline our household finances, and one of the things I’m planning to do is convert each CTF to a Junior ISA, as they offer more choice and flexibility and better interest rates too.
I have two ISAs myself and I’ve always been really pleased with the returns – all OH and I need to decide is whether we go for a cash Junior ISA, which provides low risk, but lower rewards, or a stocks and shares version, which has higher amount of risk attached (from medium to high, depending on exactly what you pick) but higher potential rewards. I’m leaning towards stocks and shares, as the investment will be in place for at least seven years, which gives the account time to recover from any inevitable dips in the market and will almost certainly earn them greater returns.
The money is the legal property of the child, but can only be accessed once they turn 18. We’ve spoken openly with girls about the accounts, and the fact the money we’ve invested in there is ideally to go towards a house or flat deposit.
Obviously the final decision will be with them, but the hope is that they’ll heed our advice and use the money as a base to continue saving for a decent deposit, or even pool their money and buy a property together under a joint tenancy agreement. If they end up living in different areas or can’t afford to buy where they want to live, we’ll advise them to buy an investment property in a cheaper area.
Research has shown that children who learn to save at an early age become good savers as adults, which is another life skill I want my girls to have. I made some silly mistakes when I was younger – spending on credit, then getting caught out when my income unexpectedly dropped – so it’s important to me that they understand money much better than I did.
Someone once told me that for every pound you put on a credit card or overdraft, you actually need at least £2 to pay it back – one for the initial debt to get you back to zero, and a second to cover the interest, fees, tax and to get you back in credit again. When you think about it like that, it’s crazy to spend money you don’t have – you’re literally throwing your hard-earned cash away!
I want to set a great example for the girls, by having this Junior ISA in place and encouraging them to add to it themselves once they start earning their own money. You can save up to £4368 per year into the account, and – provided you don’t withdraw the funds before the tax year has ended – you won’t pay a penny on the interest you earn.
And don’t be put off by that maximum amount – even contributing £20, £50 or £100 a month will give your child a lovely nest egg to build from; using a calculator that gives you a general estimation, I worked out that £500 in a medium risk stocks and shares Junior ISA, with £50 added each month over 20 years, should end up being worth something between £16,000-£21,000 (be aware that these returns are estimated, and can never be guaranteed).
By encouraging children to save and helping them build a nest egg you’ll be giving them them the gift of financial freedom; with good savings habits in place, I hope my girls can spend less time worrying about the future and more time enjoying their lives.
• take a read of this inspirational post I Am Your Friend – a Book of Hope, by Billie Bacall