Child savings are important. To know your child will have a lump sum of money when they are older is priceless. As a parent, you can help your children save for a house deposit, a car, or university spends.
Did you know, as well as your own ISA, you can have an ISA for each of your children? If you are considering different ways to give your children the best start in their adult life, the tax-efficient savings of a Junior ISA might be the best option for you.
What is a Junior ISA?
A Junior ISA or child’s ISA is a tax efficient savings account, similar to the standard ISA. They were created to help families save for their children’s future, and to create long term saving habits in the youth of today. There are many ways they differ from the type of ISA you may be used to:
- The child named on the Junior ISA will be the only person who can access the money held in the Junior ISA, and then only when they turn 18 years old.
- Anyone is able to pay money into the Junior ISA, whether they be the child’s parents, grandparents, family or friends
- The Junior ISA allowance is £9,000 for each tax year.
Once a child turns 18 years old, they will be able to access their money. If they choose to keep on saving, the Junior ISA will be automatically changed into an adult ISA. The limit will be increased to the annual ISA allowance for adults.
Junior ISAs offer long term, tax efficient savings for children. They are designed to encourage healthy saving habits. As children begin to understand that funds being saved on a monthly or annual basis into a Junior ISA belongs to them, it is hoped that they will become more curious and willing to learn about money. Alternatively, sometimes parents save into a Junior ISA for their children as a surprise for their 18th birthday.
The Junior ISA can help your child’s money stay untouched until their 18th birthday. The money can only go to them.
One of the great things about a Junior ISA is that anyone can pay into it. For example, friends and grandparents can pay into a Junior ISA on birthdays and special occasions.
Who has a Junior ISA?
Rebecca Smith, who runs a UK lifestyle blog, has a Junior ISA for her son, Jack. She decided to start saving to give Jack the best start he could possibly have in his adult life. Rebecca has decided to let Jack choose exactly what he wants to use his money for once he hits 18 years old, although she will of course be their to offer her guidance.
As well as Jack’s Junior ISA, he also has his own savings account where he puts little bits of change he has collected and is available to him as and when he wants it. Rebecca said that she loves saving into Jack’s Junior ISA, as it feels like she is doing the best by her son. Saving into a Junior ISA has definitely been a good decision for them.
Family and lifestyle blogger Catherine is saving for her child to give them their first house deposit, like her mum did for her. Blogger Joy Ejaria has said that she is saving for her daughters to buy anything they choose with their savings.
Junior ISAs are helping families save for their children’s futures. They’re set to grow in popularity as the government announced Child Trust Funds can be transferred to Junior ISAs as of April 2015.
Shepherds Friendly offer a competitive Junior ISA with an added bonus scheme. We are proud to say that we have paid a bonus on our Junior ISA it launched in November 2011. This means we have added a little extra to our members’ savings each year.
Further education fees, a first car, or a deposit on a first home are just some of the reasons why saving for your child could help them in the future.
The Shepherds Friendly Junior ISA lets you save regularly knowing that the growth from money you invest will be tax-exempt.
