The Junior ISA is essentially just a tax free savings plan, but it could be so much more than that. It could be the basis for a valuable education.
In a day and age when our children reach 18, go to university and come out with huge debts, and the prospect of having to save at least £30,000 just to get a foot on the housing ladder, all the while competing for jobs in a market where it seems everyone has a degree as well, it could be just the tool needed to change attitudes from an early age.
But how prepared are our children for this huge leap from student lifestyle to the real world? Whilst I’m stereotyping a little here, the general pattern seems to follow as such.
Child reaches 14, wants more and more expensive games consoles/hair straighteners, parents baulk at the price and suggest a job. 2 years of a paper round later and the prospect of early mornings in the rain and snow becomes too much. A job at a supermarket follows and 20 hours a week leaves a good £500 a month of disposable income to dispose of on pretty much anything they like.
Next up is the gap year, where after working full time at said supermarket for 6 months, child has saved enough to drink their way across the southern hemisphere and returns broke in time for university. Three years of drinking away their student loans they leave university with no savings, £40,000 in debt and with the same degree as 75% of the country.
Come home and promptly empty the fridge and the hot water tank and the parent child rent discussion follows. £300 a month worse off, student finds a standard graduate job, taking home £1150 a month. After phone bill, car insurance, rent, socialising, petrol, and clothing is taken into account anyone with any more than £50 left over to save is doing remarkably well. And to get to that magical £30,000 house deposit at £50 a month would take 50 years. And I can’t think of any parents who love their children enough to want them hanging around for that long.
So imagine a world where from an early age you could teach children the art of saving through their very own Junior ISA, just like mum and dad’s? Where they can be encouraged to put half of their birthday money and pocket money away towards their house in the future. By the time they reach the part time job stage, half of that £500 a month could also find its way into the same Junior ISA, because it’s what they know, and by the end of University, that fund may have grown to be substantially bigger than if they’d just frittered it away on things they didn’t need or want.
Life’s full of what if’s but I know when I bought my first flat I was grateful for the fact my mum had taken half of my wages off me and put them away, only to be returned when I wanted to buy my first house. And you know what? I didn’t even notice it was going each month.