Thought About Your Little One's Rainy Days Yet? Why I Chose the Junior ISA

So Christmas has been and gone, our wallets are lonely and threadbare and probably the last thing on your mind is saving. But maybe it is worth a second thought….

After watching Super Scrimpers on Channel 4 a few months’ back (the half-German, post-war mentality from my mother has never left me), I decided to open a Junior ISA Savings’ Account for Esmé. We are living just within our means since my career move and I had never thought it possible to be able to save much, if at all, in our current situation. At the back of my mind however, I knew it was something I wanted to start as early on as possible. Watching the show gave me the kick-start to realise that even putting in £2.50 per week (the price of a latte) would mount up to a nice little sum by her 18^th birthday – she would have £2,340 plus interest (interest rates vary from bank to bank so it’s worth shopping around).

Another factor you may not have thought about is your extended family. When christenings, birthdays and Christmas come around, your child probably ends up with a barrage of plastic that inevitably ends up battery-less in the bottom of the toy box. Grandparents would much rather see their money well spent, and what better option that to offer them an alternative gift idea that will mount up steadily over the years and help with future study, housing or wedding costs.

We set up a Junior ISA for Esmé around the time of her baby dedication ceremony and a tidy sum soon found its way into her account. All those £20s and £50s from relatives over the years and occasions soon add up. And until children are of school going age, they don’t need all those brand new toys etc. They are just as happy with hand me downs and charity shop products wrapped up in shiny paper. Just give them a quick rub in diluted disinfectant and they are as good as new. I’ve picked up lots of beautifully crafted items that have obviously come from good homes in my local shops. It seems ridiculous to waste money when you can kit out the playroom for a fraction of the cost. Plus the hunt and conquering of the bargain leaves you with a glorious, guilt-free smug feeling.

The difference between Junior ISAs and regular savings accounts is that the money is locked in until your child’s 18^th birthday. And when they hit the milestone, only they can withdraw the cash. This is one of the major attractions for me. It means that when the family budget tightens up at any point before Esmé’s 18^th, we will never be tempted to nip into the savings account to ‘borrow’ money for bills or otherwise, that realistically may never see their royal faces back in again. It also puts family at ease of mind, because let’s be honest, they are probably thinking the same thing themselves about me even though they may never say!

You might already know this but the Junior ISAs are a replacement for Child Trust Funds which were eligible for children born before 2^nd Jan 2011. No tax is paid on any interest received up to £3,600 per annum (if your little one is fortunate enough to come from a large, Roman Catholic Irish extended family). You can opt for a regular account or, if you have a gambling streak running through you - a stocks and shares one where your money is invested and you don’t pay tax on any capital growth or dividends gained.  There is also the option to have both.

I know that you might be thinking: “Well what do I do when I have my 2^nd, 3^rd child? If I do this for one, I have to do it for them all.” That’s crossed my mind too. But I think even if it’s just £2 per child per week, I could probably manage that (and forego my artisan lattes, though probably wouldn’t have the time for such luxuries by then so not much of a loss anyway). Something is better than nothing and remember there is the family too who want to help out with bits when they can.

So, as you are poking your post-Christmas wobble in the mirror and looking askance at those dusty trainers in the bottom of the wardrobe, maybe you might consider a different type of New Year’s resolution this year on behalf of the tiny person in your house – one that you might be more likely to keep.