Giving your kids a helping hand in life

We all want the best for our children. We feed them, we clothe them and we try to teach them good values. We never stop caring about our kids or worrying about them for that matter, ever after they've flown the nest.

Starting out in adult life can be a struggle these days; University education is expensive and most students are left with large debts. Finding a job can be tricky and getting on the property ladder can be even harder. With mortgage lenders demanding huge deposits these days first time buyers are really struggling. With so many potential first time buyers now having to rent rather than buy a property, the rental market is saturated which has pushed up the prices of rented accommodation.  It's a no win situation for young people these days.

Saving up a lump sum for when your children most need it could be one of the most beneficial things you ever do for them. You could make a huge difference to their lives, and it's never too early to start saving. You never know where life is going to take your children, but with some money in the bank they'll have more options and it will definitely help them out massively one way or another. It may make their life easier at University, enabling them to concentrate on their studies rather than having to get a part time job. Or perhaps a lump sum will be used as that all important deposit for a mortgage. Save for your children and it could end up benefiting your grandchildren too; the perfect legacy. Maybe they'll spend it on a life changing gap year travelling the world or on driving lessons and their first car, which in turn might enable them to get a better job. It's hard to imagine what the savings you've put aside for your children will eventually be used for when they're still tiny, but you can be sure that they'll thank you for it when the time comes.

It's important to save wisely for your children. You need to make sure that as much of the money as possible goes to your children and not to the tax man unnecessarily. From November 2011 tax free savings accounts were made available to under 18s in the form of the Junior ISA. Like adult ISAs there are two types of Junior ISA; stocks and shares Junior ISAs and cash Junior ISAs. This is a great way to grow a lump sum for your children tax free. You can open a Junior ISA for your child under the age of 18. When they reach 18, if they don't take out their savings it will be automatically converted to a standard adult ISA, so they can withdraw the money or continue to save until they need it. Anyone can pay into a Junior ISA too, so you can easily give the details to other family members so they can contribute to it. When the kids are too tiny to appreciate presents, an addition to the ISA will often be much more appreciated than yet another toy, a great choice for grandparents etc. The current investment limit for a Junior ISA is £3720 a year. It's worth remembering that the money cannot be withdrawn from a Junior ISA until the child is 18, so don't invest more than you can afford as you won't be able to get it back again in an emergency!

Another good way to save for your children's future is with an Investment Bond. When you know you're saving for the long term, perhaps for when your child celebrates their 18^th birthday, or buys their first home, then you can make the most of your money if you tie it up for a period, such as five or ten years or more. An investment bond will usually allow you to invest more each year than you can place in a Junior ISA, so it's a good vehicle for saving larger amounts and you should get a decent return on your investment. Here at Sheffield Mutual for example, you can invest from the minimum of £1000 a year, up to the maximum of £25000, and we guarantee you'll get a minimum return of 103% so you know your money is safe. Of course you could well receive a return much greater than this. You can open a bond for a child of any age. If a withdrawal is made while your child is under the age of 16 then the signature of a parent or guardian is needed.

You'll always worry about your kids, but you can perhaps worry a little less knowing you're putting a little something aside for their future. You may choose to invest lump sums periodically, or you might want to save regularly each month for them, perhaps a set amount out of your wages. When friends and family ask when your little ones would like for Christmas or birthdays, don't forget that you could always suggest a contribution to their savings. The latest plastic toy will soon be broken or forgotten but money saved could make a world of difference to their future and every little really does help.

It's definitely something worth considering. It's never too late to start saving, even a modest sum can make the world of difference to a teenager leaving home for the first time and making their own way in the world.

Visit the Sheffield Mutual website for more information - http://www.sheffieldmutual.com/

 *This blog provides generic information and opinions of the writer and should not be relied upon for making investment decisions. No advice has been provided by Sheffield Mutual. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should consider contacting 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 costs beforehand. Any reference to taxation is based on the writer’s understanding of current tax legislation and practice, which could change in the future.*