3rd December 2018 at 10:12am
My son, Arlo, is just about to have his first birthday celebration on 18 December. And soon after that, his second Christmas.
It’s unlikely he’ll remember either. Indeed, it’s unlikely he’ll remember much about his first few birthdays or Christmases, or indeed the many other celebrations he’ll be involved in. But I have no doubt he will enjoy them all.
It’s a funny thing, though, trying to predict what children of his age will actually find interesting. Thanks to my nephews and nieces, he already has a number of well-preserved toys. However, he spends most of his time playing with a saucepan and spoon, a dustpan and brush, an electric toothbrush, the vacuum cleaner and the waste bin. Most of the first six items end up in the seventh, at some point.
In light of his particular fascination with the vacuum cleaner, we’re pretty convinced that he’d love a miniature child’s version. I’m becoming increasingly sceptical, though. It seems if he recognises something is there specifically for his enjoyment, he discards it. He wants grown-up stuff.
Savings tips and life lessons…
He needs to be careful what he wishes for in that regard; tempus fugit (that’s time flies, in Latin, for those who are unfamiliar). Before he knows it, he’ll be using these things for the purposes they were intended in a house of his own.
That’s the plan anyway, if he has savings!
It’s important to us to set him up financially for his adulthood, for a number of reasons.
- First, it’s just a good thing to do. He can approach being ‘grown-up’ with confidence.
- Second, we can play a part in that financial preparation, teaching him valuable lessons about saving along the way.
- Third, I’ll be 65 when he’s 18. I’ll be looking to retire.
I can’t speak as an experienced parent as I haven’t even a year of experience, and only one child. However, my 30 years of working in financial services has taught me a few things and a stand-out message is the need for long-term planning. He’s less than a year old and hasn’t a clue what’s going on, so my wife and I will need to do that planning for him just now.
I think there’s a lot to be said for the first phase of life – the educational stage – and the need to help young people understand the financial challenges that lie ahead.
Investing in some long term savings on their behalf now means they can be well prepared with a nest egg as they reach adulthood for those challenges. I also believe this provides a great starting point for ‘financial wellness’ at later stages in life.
The opposite is true where young people face years or even decades of significant debt before they start turning this around. Some will even carry this debt long into retirement.
Don’t lose track of what you’ve saved
Encouragingly, Child Trust Funds are now coming of age as the first children to benefit reach the age of 16. Around 6 million were taken out when they were available between 2002 and 2011. However, a recent report suggests almost one in 6 of these have been forgotten by parents, with statements being returned ‘addressee gone away.’ That’s potentially £1bn in savings for children going unclaimed.
If you think you have a Child Trust Fund, but you can’t remember where it is, you can track it down through HMRC’s website here https://www.gov.uk/child-trust-funds.
Arlo wasn’t born early enough to have one of those, but we are saving for him, bit by bit.
More immediately, we have to fund his first birthday and second Christmas, which even if he won’t remember them, we, of course, will.
Wishing you all a happy festive season.
Investments can go down or up and may be worth less than what was paid in. This article shouldn’t be taken as financial advice and is based on our understanding in December 2018.