What financial advice do you need to plan for your children’s future?
Posted by Neil Shillito
Everyone wants the best for their children, financially or otherwise. Consulting with a financial adviser will help you understand the best way to support them as they grow up.
Making arrangements for your future is one thing, but when you have children this takes on a whole new significance. Suddenly, your choices have far bigger implications. Situations that you may have put up with when it was just you are no longer acceptable. A financial adviser will be able to help you plan for your future and your children’s in the most effective way.
Education
Although financial advice is usually a specialist area dealt with by qualified experts, your children will benefit most from the kind of advice that you can give them personally. Despite widespread criticism, schools in the UK do not routinely teach financial literacy. Your children will be taught maths, including lessons about indices and repeated multiplication, but there is no requirement to broach the subject of compound interest. This, more than anything else, will influence how they see money, how they view debt and whether they understand the importance of long-term investment.
Whatever other financial advice you obtain, make sure that your children know what to do with the money that you pass onto them. A little education early on will make a huge difference for the rest of their lives.
Looking after yourself
When it comes to looking after your children, a good financial adviser will probably want to make sure that you have a number of financial products in place. After all, if you are well taken care of, your children will benefit too. You will always have certain outgoings, and making sure that these are as low as possible ensures that you have disposable income to spend on your children or to invest for the future. Your mortgage will probably be one of your largest outgoings, and good advice may be able to reduce your monthly payments substantially.
Beyond this, you should gain financial advice on the types of insurance you should purchase. Life insurance is important to make sure your dependants will be provided for in the event of your death, but depending on your circumstances there may be other forms of cover you should buy – critical illness insurance, health insurance (for the whole family) and so on. If you own your own business or are self-employed, the list extends further and you should discuss with a financial adviser exactly what forms you need. Then there is your pension. Investing early on for retirement means that your children won’t have to pick up the bill for your care – a problem that is becoming acute as rising elderly care costs combine with reduced opportunities for young people due to the financial crisis.
Investing for your children
Finally, you will want to secure financial advice about specific investments for your children. These can take various forms. The government used to provide money for child trust funds – investment vehicles that lasted until your child’s 18th birthday. These have now been replaced by Junior ISAs, although there is no government funding for these. Like regular ISAs, the interest on Junior ISAs is tax-free. With both the CTF and Junior ISA, though, you have no control over how the money is spent. You may have earmarked it for university, but on their 18th birthday they are given access to the money and can do what they want with it.
If you prefer to retain control over investments for your children’s future, you can discuss with your financial adviser the best and most tax-efficient ways of doing this. You could consider a stocks and shares ISA of your own. These can be used to invest in shares but also various different funds. However, since this is a fairly specialist area you will probably want quite detailed financial advice to ensure that your investments are the right ones for your risk profile and timescale.
Neil Shillito is co-founder and director of SG Wealth Management, a forward-thinking, FSA regulated company offering impartial, fee-based financial advice Norwich and featured regularly on Asset.tv



















