Setting aside savings for your grandchildren
Helping the people you love get ahead in life is one of the most rewarding things you can do and this is especially true when it comes to your grandchildren.
Setting money aside to help them enjoy a few treats, contribute to their education or simply offer them better financial future doesn’t have to be difficult.
Start a savings account that will help you grow your investment and know that you’ll be able to give your grandchildren a practical gift that could help them get ahead.
Choosing the right way to save
Some people simply choose to simply add money to their own savings account, bearing in mind how much they’d like to give to their grandchildren at a later date. There’s nothing wrong with saving in this way but if you’re using your account for other things as well, it can be tricky to remember how much you’ve put aside for your grandchildren. To avoid this potential confusion, you can set up a dedicated savings account, either under your own name or specifically for your grandchild. Many banks offer savings products that are designed for putting aside money for your grandchildren, such as Junior ISA’s, which are perfect if you’re looking for a tailored saving solution.
For some help choosing the best account to set up for your grandchildren, have a look at the list compiled by Money Saving Expert. There, you’ll find a comparison of available children’s savings account and the amount of interest that can be enjoyed when you choose to specialise.
Saving for your grandchildren has an extra bonus, as parents who put money aside for their own children will need to pay tax on their interest if they earn more than their personal tax allowance for that year (£9,440 in 2013/14). The same rule doesn’t apply to grandparents, meaning you can put aside as much as you like for your grandchildren – provided the total income doesn’t exceed their personal allowance, which is the same as the one for adults.
Children’s Bonds and Child Trust Funds
If you’re starting to save for your grandchildren early, you may find that choosing a Children’s Bond is the best way to maximise your money. This is a way of saving that asks you to leave the money you’ve invested alone for a certain amount of time and can yield much higher rates of interest. Available for children under the age of 16, these bonds offer a tax-free way to save up to £3,000 and have a guaranteed rate of interest for the first five years. Find out more about how these bonds work and how much you could save with some information and a handy calculator from NS&I.
You may also want to consider making use of a Child’s Trust Fund, which is a long-term tax-free saving solution for all children born between 1 September 2002 and 2 January 2011. You can add up to £3,750 to this account every year and it will become available to your grandchildren once they turn 18. Find out if your grandchildren are eligible and understand more at Gov.uk.
The contents of this article are for reference purposes only and do not constitute financial or legal advice. Independent financial or legal advice should be sought in relation to any specific matter. Articles are published by us without any knowledge or notice of the circumstances in which you or anyone else may use or rely on articles or any copy of the information, guidance or documents obtained from articles. We operate and publish articles without undertaking or accepting any duty of care or responsibility for articles or their contents, services or facilities. You undertake to rely on them entirely at your own risk, and without recourse to us. No assurance of the quality of articles is given or undertaken (whether as to accuracy, completeness, fitness for any purpose, conformance to any description or sample, or otherwise), or as to the timeliness of the publication.
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