Personal Finance Information |
UK Parents Inactivity Harming Their Children's Future University and Mortgage Savings
The British government at the beginning of this year officially launched its Child Trust Fund (CTF) initiative in an effort to encourage parents and children to develop the savings habit and to teach children the value of saving their own money. Chancellor, Gordon Brown said, "The Child Trust Fund is designed to ensure that every child in our country has assets and wealth and that no child is left out and all children in Britain have a stake in the wealth of the nation". The basis of the CTF scheme is that every child born in the UK on or after 1 September 2002, will receive an initial Government payment of £250-£500 (depending on family income), which must be placed into a tax-free CTF savings account which cannot be accessed for withdrawals until the child reaches 18 years of age. Additional contributions to the account can be made by the child's family or friends, and the government also plans to make another payment to children on their seventh birthday. Parents that do not invest the government's gift within a year will have it invested for them by the Inland Revenue. This 'free money' for children idea seems on the face of it to be a great idea for parents. A recent survey by the Halifax has shown that, of those parents who have already opened a CTF account, six out of 10 planned to make further contributions, and wanted their children to use the cash from a matured CTF to pay towards a university course. The survey also showed that 28% of parents hoped the cash could be used to buy a car, while 19% hoped the money could be put towards a deposit for a flat or house. Although some families have taken to the idea by quickly investing the funds to maximise the cash return for their child when they reach 18, with figures from HM Revenue and Customs recently showing that nearly half a million CTFs had been opened, others have been more reticent, with approximately 1.2 million CTF vouchers sent out to parents still not invested. A study by Abbey found that of those who had so far not invested their CTF voucher, nearly two-thirds stated that they, "just hadn't got round to it yet", while about one-quarter had not invested the money because they did not know which supplier to choose. Another problem that has been recently highlighted is the lack of provision that has been made for Islamic children, as none of the existing CTF accounts complied with Sharia law. Under Sharia law, it is forbidden to give or receive interest or to invest in unethical firms. This meant that, in order to use the voucher, parents of the 120,000 eligible Muslim babies could only choose non-Sharia compliant accounts. Thankfully, in a move welcomed by the government, the first Sharia compliant CTF has just been launched by Children's Mutual, allowing a growing community of people who were previously reluctant to invest their CTF, the opportunity to benefit from CTFs. The take-up of the CTF has proved to be extremely disappointing for the Government, with those who have not so far invested their voucher being at risk missing out on valuable growth to their fund. Ray Milne, managing director of Halifax Financial Services, said that "Most parents probably still have opening a Child Trust Fund on their 'to do' list, but we're urging them to act now and ensure their children benefit from their investment". Whilst many view the whole idea of the CTFs as a waste of tax-payers money given the ensuing pensions problem that is looming, others see that any benefit to future university students would be overshadowed by the rising cost of university tuition fees. "For those who choose to go to university it is a particularly hollow gesture as the government will give them a few hundred pounds in cash and at the same time a mortgage-style bill in tuition fees," stated Phil Willis, the Liberal Democrat education spokesman. Whatever your opinion of the scheme itself, it seems that even the majority of those whose children will benefit from the fund are either not interested or feel they do not have enough knowledge to choose a provider. While the government can produce expensive adverts to raise pubic awareness and companies can provide information on the accounts that are available, the public's fear and apathy regarding all things related to personal finance may prove a more difficult hurdle to overcome, and this may be a problem that not only affect us, but will also lead to many of our children paying the penalty in later life. Further information: Moneynet child investment account comparisons Richard works in Edinburgh for a media company, occasionally writing for the personal finance blog Cashzilla, and drinking too much coffee.
MORE RESOURCES: Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 403, exiting |
RELATED ARTICLES
Budgeting: A Tough Love Way to Handle Your Household Budget Developing and living by a household budget is by far the best way to get your expenses under control which, in turn, can mean a much less stressful life.However, many families find it very difficult to stick to a budget. Want Your Savings to Earn a Higher Rate of Return? Try Internet Banking Doesn't it seem like the only impressive numbers we've seen this summer are the digits on the thermostat and the unaffordable prices of homes? Real estate has been excruciatingly hot for the past few years, but getting in the market now puts you in the high-risk category for a heat stroke if the market decides to cool off this year.So if a real estate induced stroke doesn't appeal to you and the stock market's roller coaster ride gives you motion sickness, it's very likely that you as a health-conscious investor are sitting on a stash of cash collecting an anemic rate of interest. What is ChexSystems? Commonly referred to as the first of the three major "Check Systems" in the U.S. UK Parents Inactivity Harming Their Children's Future University and Mortgage Savings The British government at the beginning of this year officially launched its Child Trust Fund (CTF) initiative in an effort to encourage parents and children to develop the savings habit and to teach children the value of saving their own money.Chancellor, Gordon Brown said, "The Child Trust Fund is designed to ensure that every child in our country has assets and wealth and that no child is left out and all children in Britain have a stake in the wealth of the nation". Saving Dimes Can Go a Long Way On the other hand, there are those people who are saving dimes and every other cent. Perhaps its because they hate the clutter of change but want to get rid of it instead of letting it accumulate elsewhere or still rely on the fact that change has value and should be used accordingly. Should You Borrow From Your 401(k) Account? If you have a 401(k) account, it can be very tempting to borrow from your account especially when your balance is very high and a loan could easily pay off existing debt, fund a home purchase, or pay for college tuition. Before you make the decision to borrow money, there are several things you must keep in mind to avoid risking your funds. 10 Steps To Improve Your Financial Situation Here are ten steps you can follow to help improve your personal financial situation and inevitably save more money:1. Pay Yourself WeeklyThis may seem a bit odd, but this is an excellent way to start building a substantial savings. How Check 21 Affects You The Check 21 Law is the new federal law for financial institutions and has taken effect last October 28, 2004.Before the Check 21 law was enacted, your paper check had to be physically transported from where the check was paid out before it could be deposited to the financial institution. Save Money on Groceries: Part I One universal of humanity, no matter who you are or where you come from, you have to eat. Unless you grow your own food, you will have to go to the grocery store to get it. Reduce College Debt with Scholarships Six Scholarship judges were sitting around an ovaltable. Forms were piled into 50 boxes. One Income Source Is Not Enough! My personal opinion is that in today's new economy, it is wise to have multiple income streams. Reliance on one income source poses a risk to individuals, entrepreneurs, and even large corporations. Do You Know What Tomorrow Will Bring? I've been sharing the following idea with people for a few years now, and realized recently that I had never written specifically about it. So here it is:"I cannot predict the future. 10 Money-Saving Tips 1. If you have your haircut every 3 weeks, trygoing 4 or 5 weeks in between haircuts. What's New in Checking - From Designs to Photos Just about everyone has a checking account. Checks present easy ways to make payments and they have simply become a way of life. Improve Your Professional Image Using Address Labels One of the simplest ways to improve your professional image is by using address labels. Self-adhesive business labels are THE way to go when it comes to a professional image. How To Reap The Rewards With Rewards Programs Recently, many of these loyalty rewards programs have come to the realization that they must change how they put these programs together if they are going to increase their share of the market.One way that has changed over the years is how reward programs have started linking up with various partners to offer more types of rewards for it's members. Car Donations and Used Car Donations Car donations and used car donations are the way many people choose to recycle their older model cars without having the headache of repairing, advertising, showing, and hopefully then selling them. Being able to get rid of an older car and at the same time gaining the benefits of charitable giving and a tax deduction are all part of the allure of used car donations. The Changing Shape of Family Finances Super-mumsIt seems that the proof of maternal efforts is no longer found in the pudding ? it's in the spending. Women are increasingly outsourcing personal grooming tasks and the pressure of looking good, feeling healthy, maintaining a tight ship and IQ level has meant that housecleaning and gardening are again fashionable methods to promote the family brand; housewifery is now a career, with all the attitude of 21st century post-feminism. Take Control and Master Your Kitchen Those who keep a watchful eye on where their money is spent, have long conquered the kitchen woes. No last minute panic trips to the market. Budgeting the Key to being Financially Stable Single Mother's in need of Financial GuidanceBudgeting is key to being financially stable. A budget is a systematic plan for the expenditure of a usually fixed resource, such as money or time, during a given period. |
home | site map | contact us |