Whether you’ve got a child who’s thinking about university or who wants to go straight into work, they’ll probably want a financial helping hand. But rather than simply hand over some cash, think about ways you can get them to make their money go further.
For example, November 2012 saw the launch of junior ISAs. These savings accounts allow parents, relatives, grandparents and friends to build up tax-free lump sums for children. This year the total limit on the amount of money that family and friends can contribute has been set at £3,600. Some six million children are eligible for the new junior ISAs and it’s anticipated that 800,000 newborns will be eligible each year.
Giving children financial control
Only the child can access the money built up in a Junior ISA and only from their 18th birthday. But they can manage the account from age 16, so it’s a useful way to get them interested in handling money, for example, by moving the money to access a better ISA interest rate, but without the risk of them spending it.
There are lots of ISA providers to choose from and each account will offer different interest rates, terms and conditions. Some require an initial lump sum to be paid in and others will allow monthly regular payments up to the annual limit to spread the cost. Some will pay interest monthly and others annually. There will be rules around withdrawals and their effects on the interest paid.
Using savings to develop skills
The cash built up inside a Junior ISA could also go towards helping an 18 year old develop skills that may either help get a job or support them at university. Encourage them to check out local colleges for evening and holiday courses that may suit and use the ISA money to fund the cost.
If a young person is looking to supplement their income when they first start work (often the best careers are the poorest payers when you first start out) or to earn money while studying, they’re choice of occupation needs to be flexible – something they can do in the evenings or a couple of hours here and there.
Here’s our list of top skills that can help them make money in the longer term:
Paying for driving lessons. Many employers look favourably on job applicants who can drive, even if they don’t have their own car. There are are short term jobs that are aimed at car drivers and may fit with studying.
Sewing, cooking and DIY courses. Not only do such courses help them make their money go further but it also gives them skills they can sell, such as cloth alterations, cake baking and currying out minor repair jobs. Being able to carrying out minor maintenance tasks, such as touching up paintwork, can also help ensure they get their deposit back when renting.
Learn to code. There is a really shortage of people who know how to code computer programmes, so acquiring or brushing up on basic coding can be a real plus.
Train to become a lifeguard. Local pools and beaches employ lifeguards on a part time basis and often need extra staff in the holidays. But to qualify you need to have a national lifeguard qualification.
Keep in mind that if you earn money you may have tax to pay if it exceeds your tax free allowance each year. If in doubt, ask at the tax office.