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Saving for your children’s future

Financial Wellness

Financial Wellness - Fidelity

No-one should pretend that saving and investing for children, and their education, is an easy option when there are so many other demands on your salary.  But on the basis that the best time to think about starting to invest is always a few years ago, it’s worth remembering that even small amounts put aside and left to grow are better than nothing. 

School fees

If you are saving for school fees, you are probably looking at around a 10-year time-horizon and you’ll need to access the money long before your children turn 18. This is important because some tax-efficient savings solutions, like Junior ISAs (JISA) invested in your child’s name, tie up their money until they come of age.  

The stock market may be an option in the early years of saving but as your child approaches school age you might not want to be exposed to market fluctuations. For this kind of saving you could take advantage of your own tax-free allowances and use some of your annual £20,000 ISA allowance. Remember that both you and your partner have an individual allowance to use. 

University

If you have a child on track to go to university, you may be concerned about leaving them to fund their education themselves. Parents often worry about the impact of debt; the cost of tuition fees and living costs for a typical three-year course is around £50,000. That’s a lot of money, but achievable if you start saving early enough. 

As the money will be needed on or after your child’s 18th birthday, a JISA might be a good choice for this kind of saving. Money can be contributed into a JISA by anyone, but the account must be set up by a parent or legal guardian and belongs to the child. Once a child reaches 16, they can hold an adult cash ISA concurrently with their JISA. The allowance for saving into a JISA in 2022/23 is £9,000 which can be split how you choose between a cash or stocks and shares JISA. 

Don’t delay

In the chaos of those early years, your kids’ university education probably seems impossibly far away. But there’s no better time to get saving for those distant events than now. 

Next steps

Find out more about Fidelity’s Junior ISA.

Important Information 

The value of investments can go down as well as up, so you may get back less than you invest. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a Junior ISA will not be possible until the child reaches age 18.