Before students start university, some opt to have a gap year. How students use this time can vary widely, from travelling or volunteering abroad to gaining work experience. A typical organised trip abroad lasting 12 weeks costs between £3,000 to £4,000, according to gap year specialists Year Out group, depending on the programme.
Grandparents and other family members can help students with all these costs by planning ahead and saving earlier in the child’s life.
Tax-efficient cash or investment ISAs or Junior ISAs are a popular way to save over the longer-term.
Parents, grandparents and other family members can save up to £20,000 a year into their own ISA, or contribute up to a total of £4,368 a year into a Junior ISA (for 2019/20). However, control of the money passes to the child when they turn 18.
Find out more about our adult ISAs. Barclays doesn’t offer Junior ISAs at the moment, but you can read some useful FAQs on our website.
Another option is a Barclays Children’s Instant Saver – an adult can open and operate the account as trustee for a child under 18.
“As most investments for grandchildren are likely to be over a reasonable time period, say 10 years or more, stocks and shares ISAs may outperform cash,” says Patrick Connolly, from Chase de Vere, an independent financial adviser. However, bear in mind that investments can fall as well as rise in value and you may get back less than you invested.
Caroline Anstee, managing director of Anstee & Co Limited, a financial adviser, points out that it can be tricky to strike the right balance between wanting to help younger relatives out and not jeopardising your own financial situation.
She says: “Create a budget that includes all your income and outgoings to ensure all essential costs are covered before gifting money. If there is an excess to your requirements, then it makes sense and is very enjoyable to help others.”