Whether it’s pocket money or an occasional lump sum, many grandparents give their younger relatives a regular financial boost. Chris recently bought his four-year-old step grandson a piggy bank and encourages him to collect pennies in order to save up and buy something nice. “It’s a way of teaching the children the value of saving,” he says.
What children see and learn about money in childhood will influence how they manage their money as adults, according to the government-established Money and Pensions Service (MAPS). Its research found that children given regular pocket money, and encouraged to talk about money, tend to be better at managing their finances when they grow up.
“We’ve not set up a monthly allowance but we do give the grandchildren money for specific expenses,” says Simon. “Treating them all equally is important but, obviously, the older ones want very different things to the younger ones at the moment. I’m sure it will all even out at the end of the day.”
If you want to put some money aside for a child each month, there are plenty of options. Our Children’s Instant Saver account, owned and managed by you, offers a good rate of interest on balances from £1 to £10,000. Alternatively, if your grandchild has a BarclaysPlus account, you can make regular contributions into that.
Andrew Hall, a Barclays Wealth planner, says making cash gifts to your family could make a real difference to their immediate finances – and lower your inheritance tax (IHT) liability too.
“If you want to make regular gifts, you can give away up to £3,000 a year, and it won’t be added to your estate for inheritance tax purposes. This is known as your ‘annual exemption’.
“As a grandparent, you can also give a wedding gift of up to £2,500 and as many gifts of up to £250 to anyone who hasn’t already benefited from any other tax exemption.”
Want to give away a larger, one-off sum? The rules are very different here, Andrew explains.
“Tax rules currently allow you to make a gift of any size and – as long as you live for seven years afterwards – it won’t be liable for IHT. However, these gift allowances can change, so do double-check the latest limits before you decide to do it.”
Another option to consider is a trust – particularly if you want to hand over larger sums of money and have a say in what, and when, it’s used.