Child Benefit/College Fund

Brendan Burgess said:
Hi sadie

You are confusing a few issues here.

You should have a fund for anticipated expenses and an emergency fund for unanticipated expenses. The size of this will depend on your circumstances.

But once you have enough in this fund, whether it comes from your salary or from Child Benefit, you should put the rest to work either by paying down your mortgage or maxing your pension contributions.

Brendan
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Thanks Brendan and for the link to the above
 
Hi Gerard

I had not realised that was the purpose of the account.

Does it mean that a 7 year old can drop into Zurich and cash the investment without their parents' consent?
 
GSheehy said:
It's 'her' money already.
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Yes, we know. Don't mistake a slight misphrasing as an inability to understand the very clear terms of the arrangement.

Brendan Burgess said:
If you want to psychologically assign the money to your daughter, then set up a spreadsheet and keep an account of how much you "owe her".
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You apparently misunderstand what a gift is.

If we "psychologically assign" it as you suggest, we continue to exercise s great degree of control at 18. At best we have a sum of money provisionally assigned as a gift until that time.

The money belongs to our offspring now. For every contribution made we've made an irrevocable and conscious choice to give that money to them. That current ownership gives them future choices and minimises our future power and control over them.

If you love something set it free.
 
CharlieMac said:
The child gets the money when they turn.... 18. Even if they don't choose to go to college. I'd rather have paid off my mortgage!
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That's a valid choice. Not one we have to make given the fact that the mortgage will happily be gone well before they hit double digits.

I'm not massively concerned about them going to college at 18. As long as they don't blow it all on a blingy car or something equally dumb i don't really care. I'd be perfectly happy to see them spending it on travelling the world for example.
 
I would certainly be reluctant to just give an 18 years old a substantial amount of money even for tax purposes. I don’t know how I would have reacted and I certainly don’t know how my 18 years old would react. I was far from a wild young adult. Personally I don’t think it is worth the risk and I have been recently reminded that all the good intentions and promises are not necessarily enough. I have money to make sure my children have opportunities and can have choices… I try to give them every thing they need, however it’s not the same as given them direct access to a large amount.
 
BIG-notorious said:
At what point would you trust them to make significant decisions without your approval and potential veto?
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Do you think it comes at the switch of a button at 18? My 18 years old take decision concerning his life every day. He chose his course, his friends, when he meets them and what he does with them, and to be honest he is fairly reasonable. However, I have a veto on some of his actions, particularly actions that could endangered his life as well of the life of others even if perfectly legal and mundane for an adult with experience. I have a veto, not because I don’t trust him, but because as an adult I know there is a real risk because of his lack of experience. And I would not like him to face the potential consequences. I actually trusted that we were on the same page on that…
 
Premos said:
However, I have a veto on some of his actions, particularly actions that could endangered his life as well of the life of others even if perfectly legal and mundane for an adult with experience
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For example? Not being smart, I just can't think of any example which would fit your description.
 
An example. He just pass his driving licence a couple of months ago. He has now a car that we gave him because commute to college was very difficult. He was told not to use the motorway because he is lacking practice. He is not authorise to take the car when he goes out at night (despite the fact that most of the time he does not drink at all). He was also told that at this point he was not authorised to take anyone in the car because of the distraction it can cause and the risk involved. He does know himself he can easily get distracted. It took less than 3 weeks.
Nothing illegal there. He has his driving license, the car is roadworthy, he is insured and the passenger was also 18 and agreed to take the journey. I would think that at some point in the future, the veto will be lifted and for most adults it would not be an issue.
 
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I just think that even knowing a sum of money is in the pipeline may serve as a disincentive for a young person to go the extra mile. The younger they are when it becomes available to them the less likely it will be spent wisely and then what have they or you gained? I don't think it's worth spending a lot of money on learning a life lesson if that can be avoided.

Starting a pension fund for a child, which they couldn't touch until at least 50, could be a great gift. In 50 years pension systems may be in disarray given fertility rate trends. No idea how that would work and granted that might just be another disincentive!
 
CharlieMac said:
Starting a pension fund for a child, which they couldn't touch until at least 50, could be a great gift.
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Yes, they would really be delighted with that as they continue paying rent in their 30s and 40s because they didn't have the deposit to buy a house!
 
Sure it is Ruffian And I would say a lot of people end up prioritizing trying to keep their mortgage going at the expense of making pension contributions.
 
Fortune said:
Depends on the mortgage rate
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I suppose we could issue a whole pile of caveats with any suggestion.

For the vast majority of people paying down the mortgage is correct.

If you have an Avant mortgage fixed at 1.95%, it might be better holding onto it but paying it off now would not be wrong by much if at all.
 
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