Planning ahead can ease the burden of student life

This is the time of year when many young adults embark on their new journey at university. As one of the most exciting times of their lives, the last thing they want to be worrying about is money. But the fact is, this could be one of the most costly times of their lives too, unless they are financially prepared.

15th October 2018
Investment Services

One thing parents and grandparents can do to ease the burden of student debt is to educate their loved ones about how to handle money. This can help to minimise the debts they will accrue and take far into adulthood. Empowering children by showing them how to budget and manage money is one of the most important skills you can teach. Instilling a sense of responsibility and the ability to make smart financial decisions can set them in good stead for a secure financial future – whether they go to university or not.

 

But debt is inevitable when it comes to student life – the average graduate owes thousands of pounds in loans and other kinds of borrowing. However, there are things families can do in the earlier years to significantly reduce this amount.

Saving as early as you possibly can in a child’s life can really help to set them up for their later years. For example, if a family started investing £100 a month now, then over 15 years they could have a pot worth almost £25,000 by the time a child finishes their A-levels in 2033, assuming 4% growth each year, after fees*.

 

Given that most of today’s graduates are destined to be paying off their university debts into their 50s, the choices students, parents and grandparents make now could shape their finances for decades to come. So, it really is never too early – or too late – to start planning and saving.

 

Investing for children is no longer a complex issue, thanks to the 2011 introduction of the JISA. Just like an adult ISA, there are cash and stocks and shares versions, although cash JISAs often barely manage to match inflation, which makes stocks and shares a more attractive option for potential growth. There is also the great tax advantage that all the money accumulated and any returns on it, until a child reaches 18, is tax free and will remain so for the rest of their lives.

 

Investing can be complex, and the value of investments can go down as well as up, so you could get back less than you put in. This is why it is always important to seek professional financial advice before making any decisions. If you would like to talk to us about the JES Stocks and Shares JISA, or any other aspect of your investments and wealth management, please call us on 01934 875 919.

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