Posts Tagged ‘children’
10 ways to teach your children to be money-wise
Recently an independent commission found that thousands of students are being put off applying to university by a rise in tuition fees. The first report revealed that applicant numbers to English universities are down 8.8% compared with two years ago – around 37,000 fewer students[1].
When you look across the rest of the UK, the conditions facing young people are worrying. A poor graduate job market, higher debt levels and inflation means that careful management of personal finances is key for the next generation. With GCSE and A level results dropping through letter-boxes throughout England last month, university and further education costs are a hot topic. Official figures released in August by the Independent Commission on Fees show that English higher education establishments will now be able to charge students up to £9,000 per year[1] – which could add up to a maximum of £27,000 for a three year degree course. Many young people will be asking themselves: “Can I afford higher education?”
At Scottish Friendly we believe in thinking long term when it comes to navigating a tough financial climate. So in this blog we have split our guide into four key chapters in life with some helpful tips for teaching children of all ages important money skills that will help them get a good start in life. Like any good habit, once you teach your children to establish a positive pattern, saving and managing money well should hopefully become second nature to them and can make a big difference to their adult life.
Throughout their childhood it is also important to remember you can save or invest on their behalf. Help ensure your child gets off to a good start in life by investing from £15 to £25 per month and using their tax-free savings allowance for a maximum of 18 years. Look out for products such as the Child Flexible Plan. You can make tax-free investments for a child aged under 16 to give them something to build on when they start adult life (remember tax treatment depends on their individual circumstances and tax law may change in future).
2-5 years old
- Imaginary play – Children revel in make believe and the simplest play can be turned into a basic lesson on how money works. Empty your penny jar and turn a cardboard box into a shop or ice cream parlour by cutting out a window and door. Put some pots and pans in and play at being a customer with them as the shopkeeper using pennies.
- Counting – Language and numeracy are fundamental skills that we learn from our parents. So counting out loud even early on can familiarise a child with numbers. One thing you could do with a toddler is paint colourful dots on a sheet of paper and count them out loud together. This will encourage the child to vocalise numbers and set the foundations for an appreciation of numbers and counting.
- Watch and learn – Let your little one see you pay for things, and establish the pattern of behaviour in their mind: in order to get the shopping, mummy or daddy has to give some money. For older children you could let them participate, though keep an eagle eye on where the change goes!
5-10 years old
- Savings reward chart – A smart way of encouraging children to adopt a savings mentality. If they have a toy in mind, say the latest Lego space station or Nintendo DS game, cut a picture out of a magazine and draw a Blue Peter style “totaliser” to chart their money saved. Keep a jar close by and let them mark off the increments towards their goal by sticking stars on the chart. Be disciplined though, and make sure they don’t see the money saved as a sweet fund every day!
- Jobs around the house – Understanding that work and being helpful can result in some pocket money and may even take the strain off parents on the cleaning front. Set 5 simple weekly tasks and decide how much each one will cost, then put the money in the savings jar mentioned above.
- Wants versus needs – Establish the difference with your child between what they want, and what they need. They may need a new school pencil case, but they probably want a new bike. Talk to them and explain sometimes it is better to put money into the thing they need, and hard work will result in the things they want.
10 – 16 years old
This age group is critical because of the huge changes that take place in life that will establish how a child perceives, saves and spends money.
- A current account – Many parents will feel the time is write to open a basic bank account for their child to give them some independence and lessons about managing money, security and saving. Parents can use this as an opportunity to explain how banking works.
- Pocket money / a first job – A part time job in the holidays can be a great way to earn some money, gain some experience and meet new people. Whether it is mowing lawns, a paper round or cleaning cars.
- Talk about goals – Your child will rapidly be becoming a young adult and saving for a goal such as a trip abroad, university, or a career. The earlier they can establish goals, the earlier you can work out a financial plan as a family to help them get to where they want. This summer young Olympians including Yohan Blake, Greg Rutherford and Laura Robson are great examples of how aiming for goals can lead to great things. It will have taken discipline, sacrifice and financial backing – but as the saying goes, “Anything in life worth having is worth working for.”
16 and Upward
- University – The big decision will be whether your child will want to enter higher education in the pursuit of a degree or not. If your child decides University is for them, sit down and look at their savings, talk about a budget and how much the family can support them. Research funding help and the best available savings plan for them. The personal finance experts at The Daily Telegraph have just published an article on Student finance: how to manage your student finances, from bank accounts to online discounts, which makes for interesting reading.
- ISAs – Your child will become eligible for standalone ISA investments on their 16th birthday. They could also invest between £15 and £25 a month as part of a Family Flexible Plan, which is run by Scottish Friendly for families in the UK. The purpose of the plan is to let you invest as a family and beat the taxman together! You invest for 15 years but each family member’s policy has built in flexibility, allowing you to cash in your plan early if needed. This is over and above other tax-free allowances such as ISAs. Again, you must remember that tax treatment depends on your individual circumstances and tax law may change in future. Also, if you access your plan value before 10 years you may have a tax charge to pay as well as a £50 deduction from the cash-in value.
We hope these basic tips come in handy when thinking about children’s finance. The key thing is to speak openly about saving and investing. Allow children the right amount of responsibility as they grow and make sure they develop a simple and regular savings habit that helps them towards their goal.
No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.
Reference
[1] Independent Commission on Fees http://www.independentcommissionfees.org.uk/
Scottish Friendly’s 10 things to do for kids on a rainy day!
So the summer of 2012 is proving to be one of the wettest on record, but here at Scottish Friendly in Glasgow we are used to investing for a rainy day. However, when it comes to school holidays, and the downpour doesn’t stop, it is handy to have a few options up your sleeve to make a rainy day a memorable one.
We decided to help parents by providing ten ideas for a rainy day for kids which don’t eat into your savings and investments.
- Create a fort – Forts can be made out of anything around the house and can be so simple to create. The great thing about forts is that they cost almost nothing, you can use an old cardboard box and they can provide adventures and creative play for adults and kids alike. Once the fort is built; it can double as a cinema, a book club or even a home for teddy bears.
- Revel in the rain – Don’t fight it, enjoy it. Wrap up well in waterproofs and go for a brisk walk. Introduce the children to the appeal of splashing through puddles en route to the nearest family-friendly pub for chips and ice cream. Or step outside and stage a water-fight, with the aim of getting as wet as humanly possible.
- Museum peace – The word museum can all too easily sound like a tolling knell of boredom, but not anymore. Today’s museums are brilliant places to go with children. For example, there are an irresistible number of things for kids to do in the UK. Just visit www.museums.co.uk
- Make a Movie – Most households have camcorders. Keep it charged up and get ready to roll up your sleeves and release the inner Spielberg! Let your kids create a story to be made into a movie. Have them collect props, costumes and whatever else they need. Do a few dress rehearsals before the “taping”. This rainy day activity will turn into a cherished memory IN years to come.
- Read stories – Children get so much out of good story telling, whether it is a Julia Donaldson tale or a Cressida Cowell, young minds get far more out of a good story session than a film. Arm yourself with a range of voices and away you go. If you need more information on the right type of books for a particular age range, visit the Scottish Book Trust, they have a mountain of knowledge that will see your family entertained for hours. It has also been proven that children who are regularly read to perform better in the classroom and it can be great for family bonding. www.scottishbooktrust.com/
- Stay at home Olympics – the games are underway as are school holidays. It will inspire a generation of young people into sport. But what if you are waiting for Andy Murray to take to the court or Usain Bolt to get set for a sprint? Simply create your own Olympics in the comfort of your own home. Turn speed Scrabble into a competition where you can test your quick thinking and problem solving abilities together. Perhaps tiddly winks is more your thing? A Lego build competition will have children over the moon. Create a scorecard and prizes for every participant.
- Play at dressing up – Often the things people enjoy most in life are the most simple. Dressing up isn’t complicated, but it can make a rainy day bright with colour. If you have a little fashion wannabe, turn the living room into a mock catwalk and play some fun music to get the full effect. You can also encourage children to make their own outfits! www.bbc.co.uk/cbbc/thingstodo
- Paint and draw on request – This is so easy to do, but often parents get put off by the mess it can involve. We suggest laying down old newspapers on the floor and table and accepting that kids are messy when they paint. Get involved too by asking your children what they would like you to paint, and once everything has dried, pin the pictures up on the fridge, but if they are really good, mount them on the mantel piece and enjoy your very own family masterpiece for years to come.
- Bake a cake – Baking with kids is a great way to bond and have some quality time together. Kids are naturally inventive, drawn to sugar, and will soon want to be trying something a bit more challenging, so let the kids get on with the fun part – like decorating, trying new toppings, and having a great time!
- Go swimming – Sometimes, if it has been raining for ages, the best option might be to get truly wet. Swimming is a great form of exercise and is cheap to do. For something different – take your kids to an outdoor pool. You can find out more about these from your local council website, but here is a link to the ten best in Britain: www.telegraph.co.uk/news/uknews/3089265/Britains-top-10-lidos.html
We hope you and your family have a great time trying these activities out if the rain persists. We certainly did!
Scottish Friendly’s 10 Things to Do For Kids on a Rainy Day!
Children’s pensions should not be seen nor heard
Google Children’s Pensions and you’ll get a consistent result with Virgin Money at the top. Now before I go any further let me state for the record I love the Virgin brand, I love Virgin Trains and Virgin Atlantic and have sincere respect for Virgin Money. I recall that they were one of the early adopters of passive versus active fund management and played a great role in calling into question the value added by so-called active fund managers.
Which is why I can’t see the logic in them tarnishing their brand with the flawed concept of children’s pensions.
I can see why they’ve gone for it. It’s almost virgin territory (see what I did there) so it gives them a place in the market. It’s also an interesting concept to play with from a PR point of view; using tax relief and the magic of compound interest over 60 years. it’s possible to show how “easy” it is to set up a child as a pension millionaire.
Yes it’s flawed and how much will a million quid be worth in 60 years time? Indeed how much of a pension will a million quid buy you in 60 years time? But hey who is counting, it gets you cheap headlines and there is nothing better on a slow news day.
But that’s the point, with children’s pensions it’s cheap but in my view it’s also nasty. A popular consumer brand should not spend its time trying to pretend that this is anything other than a highly niche product.
Why in God’s name would anyone invest for a child in a pension pot when there are far better alternatives.
Firstly pension benefits are going to be locked away for up to 55 years (on current legislation). Who knows what the legislative landscape will look like by 2067! That million quid in pension benefits may all be means tested away meaning that all that hard invested money has gone to waste. Indeed you may not make it that far, who is to say that pensions may be subject to a tax raid by the government, it’s happened before. So would you trust the government with your kids money for nearly two life sentences?!
Secondly even if you are fixated with the concept of getting a pension set up for your kids the ISA first strategy screams at you to invest their money in a JISA. You can then switch that money to a Pension when the child is a higher rate taxpayer, or at least leave things until the last minute (before the “child’s” retirement) before switching to a pension – at least then they’ll be able to do so in the light of the legislative landscape at the time and work out whether it is worth switching to a pension.
Even if the JISA route has been exhausted, and at a £3,600 a year limit we are talking about wealthy individuals now, there are simple enough trust routes that can be used to incubate investments for children allowing them to be switched to a pension in later life if the ISA first strategy so dictates.
Children’s pensions are an exceptionally niche product. If Virgin are going to advertise them it should be in the same places that they advertise Virgin upper class flights. Come on, you are starting a new relationship with money, why not show it by turning your back on a cheap bit of PR and a dreadful product.