Money Matters

FINANCIAL PLANNING for young people

Establishing a healthy relationship with money begins at a young age, so it’s never too early to help the younger generation develop their financial skills. Lisa de Silva has explored some ways to help children and young adults learn to save, budget and manage their money

FINANCIAL FOUNDATIONS The earlier a child starts to develop financial skills the better. From an early age encourage counting coins and matching the number of pennies to higher value coins, such as 10p or 50p. When out shopping explain to your child why you are choosing a less expensive brand of groceries and once they are old enough, ask them to keep a running total of what you’ve bought. This helps them to understand budgeting.

Linking pocket money to chores is a good way to teach children the value of money, how to earn it and how to save for an expensive purchase. Depending on their age you can get them a piggy bank, create charts, or use a digital tracker to watch the money grow.

Older children can also be encouraged to sell unwanted items (with your help) to raise money for things they do want. This can encourage them to feel confident and independent in earning their own money. BANK ACCOUNTS & PREPAID CARDS Bank accounts and prepaid cards are good options to help children learn about real world banking and for you to monitor what they spend.

From the age of 11, a child can open a mobile-based bank account, with no overdraft facility or credit check. They come with a debit card which can be used to make purchases in shops and online. If you prefer, there is the option for a more restricted cash card, used only for cash withdrawals. Some accounts offer interest on the account balance, and this is valuable for understanding why savings are a good thing.

Alternatively, a prepaid card is like a pay-as-you-go mobile phone. While these can initially incur a cost, they are available to all those over 6 years of age, if an adult applies on their behalf and the attraction is the parental control over spending limits. They work in the same way as a debit card and are useful in introducing children to banking and budgeting.

Linking pocket money to chores is a good way to teach children the value of money

JUNIOR ISAs The best way for under-18s to save is via a junior ISA. These are tax-free savings accounts into which the child (or their families) can save and invest up to £9,000 a year. The money is locked-up until the child reaches 18, when it becomes a standard ISA to which they have full access. There are two types: Junior cash ISAs, into which cash is deposited for a defined amount of interest and Junior Stocks & Shares ISAs, where the return is dependent upon the specific investments. The government are adding a 25% bonus to what you save each year

LIFETIME ISAs (LISAs) Anyone aged 18-39 can open a LISA and can continue putting money into it until the age of 50. Savings of up to £4,000 towards either your first home or retirement, can be paid in during any one tax year. The advantage is the government are adding a 25% bonus to what you save each year. So, someone saving £4,000 pa. will benefit from an extra £1,000 pa. from the state. You also earn tax-free interest on what you save. If you use the LISA towards buying your first home, you can continue paying in (up to age 50) to go towards your retirement funds. As with Junior ISAs, you can choose between a cash or an investment LISA. Be warned, if you take cash out and do not use it for a first home or retirement, you will lose 25% of the amount withdrawn. l

Why is a will important?

Making a will means you can be sure that your property will be properly taken care of when you die. The executors and trustees will be chosen by you.

If you don’t prepare a will – if you leave it to chance – this may result in unsuitable people dealing with your estate after your death. Do you want to make sure your children and dependants are provided for – or to appoint legal guardians for your children? What about if you are an unmarried couple? We are able advise you so that you are able to make provision for your partner on your death. Do you want advice on inheritance tax or making a gift to charity? Again, we can help. You may want to set up a trust in your will (e.g for a disabled beneficiary). We are able to advise on all aspects of trusts and setting up a trust in your will.

Don’t leave it to chance. Speak to a professional while you can.

If you would like further information, please do not hesitate to contact Aileen Francis at Percy Walker. Aileen is a solicitor and specialist in this area of law and a full member of the Society of Trust and Estate Practitioners.

Percy Walker & Co LLP

Robertson Chambers, The Memorial, Hastings TN34 1JB T: 01424 721234 F: 01424 721376 enquiries@percywalker.co.uk www.percywalker.co.uk

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