Investing In My Childs Future With a JISA

Saving for my daughters future is very important to me, but it’s also something that I’m terrible at getting around to, and also checking that I have the best plan in place for her. 

When I was growing up, my parents had a savings account for me but they tended to use the money for things like school shoes etc – but when it came around to buying my first car there was some money in the account to help me with that (my first car was a lovely little ka!).

I know that things are going to be even more expensive when my daughter is older, and although I want her to have a great work ethic and understand that saving her own money for something she wants is important, I also want to help her as much as I can, especially if interest rates can grow any money that I put into a savings account for her – luckily WealthSimple have a great option available.

There are a few things that a savings account for your kids could be used for, such as:

  • First car
  • Towards house deposit
  • Travelling
  • University
  • Driving lessons

What is a Junior ISA?

A JISA stands for a Junior Individual Savings Account, which is a tax free savings account for under 18’s. You need to be living in the UK (although if you are a Crown servant you will still be able to set one up).
A parent or legal guardian can open up an account on behalf of their child from birth – or if they are 16 years old, they can be set up by themselves.

Although the money in the account belongs to the child, they will be unable to withdraw it until they are 18. When they turn 18, it will change automatically into an adult ISA.

With a Junior Stocks and Shares ISA, this is an account where you can invest your child’s money into investments like shares and bonds. Any money that you profit from with this ISA is also tax free. Bear in mind though, as with an investment account, it will not be risk free – so the value of the money in the account can decrease as well as increase.

Pros Of Having a Junior ISA

If you’re wondering if a parent can withdraw money from a Junior ISA – the answer is no. The money in the account belongs to the child only – so only they are able to access it, when they are 18 years old.

It is tax free, so your child will benefit from getting all of the money that is paid in for themselves without having to pay anything to the tax man!

There is no minimum amount required when paying in, so you aren’t tied in to paying a large fixed amount of money each month, which personally would make me feel a bit pressured.

You can make extra money for your child with the stocks and shares ISA if the value goes up, but of course as previously mentioned don’t forget that it isn’t guaranteed and the value could actually decrease. Such is the way with all investments!

The money is protected – all cash that is put into a UK bank account is protected by FSCS (up to £85,000 per person in any one authorised firm is safe even if the firm collapses).

WealthSimple have an app – this makes things much more convenient, if like me, you are always on your phone and love checking on your savings account often (I’m a bit obsessed to be honest!).

Just the term ‘investing’ can cause some people to dismiss the idea, because of the fear of the unknown – but this could potentially be holding you back from earning more money than just leaving it where it is, or not saving any money at all – is the worst thing that you can do!

The simple fact is, the sooner that you start saving, the more money that you – or in this case your children – will have.

In terms of the psychology of money, we find it really hard to imagine our future self as us. What I mean by this, is that psychological studies have shown that when we are thinking about our future self, a different part of our brain fires up when compared to how we think about our current self – we think of our future self as a completely different person.

This explains a lot about why we don’t completely plan for the future (we may plan in our heads, but do we actually take the action required?) – now you know this though, you can take action now – and save money for your children in the future.

We don’t know what the future holds or what the financial situation of the world will be like when our children are older – look at the difference already between our grandparents, our parents, and us! It is much harder now to do something like buy a house, due to the increase in property prices, changes with mortgages etc.

I don’t want to hand everything to my daughter on a silver platter, but I do know that I don’t want her to struggle. Struggling financially is no joke, and can have all sorts of other effects on you such as mentally and physically. I don’t want that for her.

I am going to try and teach her good money tips and to get the right mindset and the value of money, as best I can, and hope that she will be savvy enough to help her money work for her…so that the money I save for her will be a welcome bonus.

What Other Info Is Useful?

The first £5000 is managed fee free for the first year – if you sign up using my link you will be able to receive this (signing up is free!). Wealthsimple has no minimum amount – you can start investing for as little as £1.

If your child has a Child Trust Fund, they will be unable to have an ISA open at the same time, but you are able to transfer the trust fund into the ISA.

Other family members are allowed to pay into the account. This is very helpful when it comes to things like birthdays/Christmas etc when family members may want to put some money into their savings account. I have always put cheques made out in my daughters name into her savings account, and will continue to do this.

As mentioned, if you sign up for free now, you will get your first £5000 managed for free – and start saving for your kids today.

Is it just me that’s patiently waiting for my mum to tell me that she had a savings account for me that she forgot about?!

This is a collaborative post.