Education fees are increasing, and our children are likely to expect our never-actually-uttered 'promise' to be fulfilled – they can have the best education available to them. A recent study suggests that a typical three-year degree costs around £55,000, once fees and living costs are included.
A plan made early enough can mitigate these large costs – whether it be for school or university, an education fees plan can make those decisions in the future much easier.
The Junior ISA (JISA) must be first on the shopping list to financially help our children on entering adulthood. With university fees at an all-time high, and mortgage deposits often beyond the reach of first-time buyers, the JISA, which was launched in November 2011, offers an efficient savings vehicle with many of the same features as adult ISAs. In addition, since April 2015, it has been possible to transfer existing child trusts funds (CTFs) over to a JISA. Investment limits for 2016/17 of £4,080 mean that, in a similar way to the adult ISA, using the allowance each year in the long term can generate a sizeable pot.
As with any investment, JISAs may not be suitable in all circumstances, and there are pros and cons. It can be a long-term, tax-efficient savings route for a child; however, there is no flexibility on early access. At 18, the account holder then has complete access to the proceeds. This may be a cause for concern as the young adult will have full access to the money. With many young adults having debts in their 20s, it reinforces the fact that there is a responsibility to educate our children about money and financial planning in particular.
Planning is the key and there are a range of other investments which parents and/or grandchildren are often well advised to consider when planning for a child’s future:
Child savings bonds
Pensions – yes, even before they are earning, your child/grandchild may have a pension, with tax relief
Equally, it may well be that all you need is to protect the source of the funds that pay for school fees and investigate family protection options. The death or serious ill health of a parent or guardian can have devastating consequences financially as well as emotionally.
At Mattioli Woods, we have one best-selling product – peace of mind – and we are seeing more and more clients planning for their children’s futures. “Disaster recovery plans” are being built to ensure that school fees (and more) can be met in the event of the untimely demise, or serious illness, of a parent. For others, tailored solutions mean consideration can be given as to how best to help children, grandchildren, etc. in financial terms, regardless of their future needs. Whether cascading funds for the mitigation of inheritance tax or simply making sensible plans to meet future expenses, the experienced consultants at Mattioli Woods can help.