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Is it time for saving to become fashionable again?

October 8th, 2012 Posted in learning about money, teaching kids about money
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Quite where the ‘want it now’ instant gratification culture came from is difficult to pin-point. Several factors have contributed; the availability of easy credit, TV & Media and low interest rates. The result is that saving has almost become an old fashioned out dated notion. Why delay the gratification, when you can have it now? What suffer the perceived pain of waiting for something when it can be charged to a credit card or other finance plan?

The results of these attitudes however, are now easy to see. With many people struggling with mountains of personal debt and having to sacrifice necessities every month to pay for luxury purchases.

Is it time for saving to become fashionable again?

Teaching children to save at an early age can instil the discipline, habit and decision making process that will last a lifetime. Introducing older children to a range of savings products and methods will help grow their financial IQs and plant the seeds for sensible money choices and despite interest rates being historically low there are a few good deals around on Fixed Rate Savings

An understanding of interest rates and how they can penalise credit purchases is an essential life skill. So too is understanding how savings and investments can grow to provide financial security and independence.

Parents can set an example by opening (and using) their own regular savings account and by sharing the experience with their children.

One provider we like is Birmingham Midshires who were named the Best Direct Savings Account provider for a record 8 years in a row, and for the 3rd year, we were also voted the Best Direct ISA provider at the 2012 Your Money awards.

They have a range of savings products and accounts including fixed rate savings

Action to get started today:

  • Open a savings account and start a regular contribution
  • For younger children start the savings habit with a money box, piggy bank or savings jar
  • For older children progress to a savings account of their own

You may not see the benefits instantly, but often in life taking the long term approach brings higher rewards.

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Children’s ISA’s – What You Need To Know

November 20th, 2011 Posted in kids and money
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It’s commonly believed that in the UK Children are exempt from tax. This is in fact a money myth.  They are treated in exactly the same way as adults, which means each child can in the 2011-12 tax year earn up to £7,475 tax free from income, savings or investments. Grown-ups who enjoy managing money sometimes look into an online accounting degree.

Usually children under 18 don’t earn that much from part time jobs etc, apart from a few young entrepreneurs, hence the often held belief that kids can earn tax free.

Assuming your child won’t earn more than £7,475this financial year (watch out child prodigies!),you can ensure that any interest is paid without the tax being automatically deducted by filling out the Inland Revenue R85 form (available from most banks or online).

Alternatively you can open a children’s ISA which allows interest to be paid free of tax plus attract a  much higher interest rate of upto 6% in some cases. Children’s ISAs were launched in November as an encouragement for children (and adults on their behalf) to save money. Many new accounts offer incentives such as piggy banks or high street vouchers. We think they should give away sets of The Financial Fairy Tales books instead as this will have a win win effect of encouraging new accounts and teaching children about money, (marketing execs take note!)

In essence children, parents, grandparents or anyone else can make deposits of upto £3600 in a tax year. The money stays on deposit where it cannot be touched until the child is 18. This makes it a great way of saving for future university fees, a first car or a gap year in the Caribbean!

Here are a round up of some of the best articles we could find on the subject of Children’s ISA’s

http://www.moneysavingexpert.com/savings/child-savings-tax-free

http://www.bbc.co.uk/news/business-15522384

Once you have decided on opening an account, this is a great opportunity to discuss the benefits of saving and start a money conversation with your children. Keep them involved with the choosing, the paperwork and making the first deposit.

Who know’s their savings might need to help look after you when your pension runs out!

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