Your Junior ISA (Individual Savings Account) matures on your 18th birthday – this means, from this day you can access the funds in your plan. If you don’t want to take your money out at this point and you’d rather continue investing it in an adult savings plan, this is also an option as you can simply request for the money to be transferred into our Stocks and Shares ISA.
Here, in our expert guide, we are going to take an in-depth look at how your Junior ISA works before and after you turn 18.
Before turning 18
Your parent or legal guardian can open a Junior ISA for you during your childhood, which they then manage until you are old enough to do so yourself. Whilst this person may have control over the plan, along with parental responsibility, they cannot access the money and do not own it once it has been deposited. Your Junior ISA can be opened from the day you’re born and once it’s opened, anyone can add to the plan, whether that’s relatives or family friends.
You are entitled to all of the money in your Junior ISA when you’re old enough to fully access the funds. You can only take the money out of your Shepherds Friendly Junior ISA when you’re 18 years old but from the age of 16, you can take over management of the plan from your parent or legal guardian if you want to.
Turning 16 – small steps into financial responsibility
When you reach the age of 16, you can register to manage your Junior ISA if you choose to, taking over from your parent or guardian. This means that you’ll become the main contact and if we need to get in touch regarding your savings plan, then we will reach out to you directly, instead of the original person who opened it. This can be a good way to ease you into taking responsibility of your finances. However, please note, that whilst you can manage your plan from 16, you cannot take money out until you reach the age of 18.
Whilst it may seem like a lot to take on at the age of 16, if you need support from adults you’re close to or want guidance from us on how your Junior ISA works, then we’d encourage you to ask any questions you might have, to ease you in. If you know someone with experience with savings plans that can teach you how to save, it could be really useful for you to speak to them at this stage.
You can also open your own Junior ISA at 16 if you want to and don’t currently have one. The same rules apply with this – you can save in the plan up until you’re 18, which is also when you can access the money you’ve saved.
The day arrives – turning 18
Happy 18th birthday! Now that you’re officially an adult in the eyes of the law, you can access the money in your Junior ISA and do what you want with your savings. That isn’t to say you should rush in and splurge it all straight away – it’s important to carefully consider what you want to do with your money as it can go towards special opportunities, life goals or even your future. For example, these funds could help you to get a head start with any savings goals you may have, whether you want to put money aside for a holiday or your education. If you have any questions on how to go forward at this point, then feel free to get in touch with us here at Shepherds Friendly – we have plenty of experience when it comes to guiding people through the world of savings!
A note for the parents: Remember, one way to get top-ups for your child’s ISA on special occasions is through relatives or family friends making contributions to their savings pot. Gifting money to children is a great way to build up your child’s nest egg throughout the years.
Maturity of Junior ISAs
The term ‘when your Junior ISA matures’ essentially means when your savings plan’s term comes to an end, which in this case, will be on your 18th birthday. In the build-up to this date, if you have a Shepherds Friendly Junior ISA, we’ll be in contact with you about your options and get confirmation from you regarding what you want to do going forward. You have a few different routes to consider, but the most common course of action is either withdrawing the money from your plan or reinvesting it into an adult Stocks & Shares ISA. We will speak to you about what you’d like to do and go ahead from there.
Option 1 – Withdrawing cash
As you’re now 18, you have full financial freedom to withdraw the cash from your Junior ISA if that’s what you’d like to do. This is a great option if you want to put money towards a large purchase such as your first car, your first solo travel adventure, or even your first mortgage. Alternatively, you can simply put your money towards living costs and hobbies – it’s totally up to you how you spend it. However, we would recommend that you put thought into what you do purchase with this, as it’s a great opportunity for you to make the most of.
Assuming your plan is up-to-date, and we have your current date bank details, we will pay out the money in your plan once it’s matured, unless you’ve told us you want to reinvest your funds into an adult Stocks and Shares ISA.
Option 2 – Reinvesting into an adult ISA
If you aren’t sure what to spend your money on, or you simply don’t feel the need to withdraw it when you turn 18, your other option is to reinvest the money into an adult Stocks and Shares ISA. This can give you extra time to think about how you want to spend your money when the time comes and it gives your fund more of a chance to grow over time.
There are different plans out there for you to consider, but a popular choice is a Stocks and Shares ISA, which works in a similar way to the Junior ISA and is easy to transfer to with Shepherds Friendly, if that is what you’d like to do. There is no charge involved with reinvesting your money into a new savings plan with us. You can set up Direct Debit contributions to add to your plan automatically, which start from £30 monthly, or you can deposit lump sum amounts as and when you like. For more information about our Stocks and Shares ISA, click the link.
A big step into your financial future
Becoming an adult and starting to take control of your finances can seem daunting, but it’s also very empowering. You can weigh up your options and choose what to do with your savings plan once your Junior ISA matures on your 18th birthday. This can give you greater insight into money management and encourages you to think about your future. Whether you withdraw the money or reinvest it, you should always put careful research, time and consideration into your decision. There’s no right or wrong answer – as long as you are happy with your choice, that’s ultimately all that matters.
Here at Shepherds Friendly, we have almost 200 years of experience helping our members to plan for their financial future. Our Junior ISA was launched in 2011 and since then we have paid an annual bonus into each member’s plan. If you’d like more information about how we could help you on your savings journey, please reach out today.