Chapter 5 - Saving

Saving may seem like the last thing that you want to think about if you are on a tight budget. However, savings can give you real peace of mind so that when the unexpected does happen a drama doesn’t become a crisis. In general it is a sensible aim to have put away about two months wages to cover unexpected emergencies. Putting a little amount away regularly is a good pattern to get into, even for very small amounts.

If you have a bank account, you can arrange for a little to be taken out each month and put into a separate account. That way you don’t have to remember to save and you can’t easily raid it! As you save you’ll also receive interest – money will be working for you, not against you!

The Child Trust Fund

We all want to help our children have a solid start in life particularly at the point when they want to fly the nest and become independent adults in their own right. This can be an expensive process whether it’s going to university or buying a car and our children will often look to their parents for support.

To encourage saving for your children and help them learn about personal finance the government has set up the Child Trust Fund which is a long-term tax-free savings account. The scheme is for children born after 2 September 2002 and to set up an account you need to be claiming Child Benefit. The government will automatically put £250 (£500 if you qualify for the maximum amount of Child Tax Credit) into the account when it is opened.

An additional £250 (or £500 if you qualify for the maximum amount of Child Tax Credit) will be put into the account by the government when the child is aged 7. Each year up to £1,200 can be put into the account by parents, family or friends. This money cannot be touched until the child turns 18, but then they are free to do whatever they want with the money that has built up.

If you want to find out more about the Child Trust Fund visit www.childtrustfund.gov.uk or phone 0845 302 1470.