Child Trust Funds have been in the back of my mind because Dylan was born in 2004 and they were launched in 2002. I remember lots of press about them at the time and they were hailed as a hero product where all children would receive £250 that was increased to £500 for lower income families (36% of children fell into this group). Now that the first of these teenagers is turning 16 many of us are thinking where can I find my child trust fund. However, its worth noting that as parents we don’t need to do anything. This CTF is held in the teenager’s name and only they can manage or withdraw them.
Every couple of years I remind myself that when he gets to 16 or 18 I need to do something. I know I have a piece of paper with some information on his CTF that is in the drawer by my bed but that is all I know. I will need to find my child trust fund in order to make sure that we recieve the money.
There will be many parents like me that will have been gifted this start to financial planning for children and it is important that we understand the benefits of saving and investing for our children. I currently have one daughter at University and it is expensive. I wish I had started proactively saving for this stage of her life. The tuition fees are covered by a loan that isn’t paid back until after graduation and when the student is earning. However, it is the living costs that parents do need to be concerned about. Our young adults are not independent and the living loan is means tested. I have written about the average student living costs and how much we are expected to contribute each and every week.
The child trust funds aimed to encourage parents and children to develop the savings habit and engage with financial institutions however the scheme only ran to 2011. However, it did spark a change and made parents realise the importance of saving for children. Junior ISA’s followed the Child Trust Funds.
But what has happened if you, like me, are one of the parents who has a child turning 16 and was given this £250 startup? Well the great news is that some of these child trust funds are now worth £1000 and TwoZeroEighty have launched a product aimed directly at helping teenagers take control of their account and taking responsibility for how it can be invested. From the age of 16 the teenagers can take control of their CTF although they cannot access or withdraw the money until they are 18. This places the teen firmly in control and gives them the freedom to choose what sectors they want to invest in. Currently the teenagers can choose a portfolio that includes Digital Futures, Good UK or even Fashionista, whatever their interests they can invest in companies operating in that sector. The advantage of this is that it will help young savers learn about investing and also support their interests.
TwoZeroEighty have also simplified how to find my child trust fund if you have lost that piece of paper that you remember putting in a safe place just after they were born. You know that time when them turning 18 was far far off in the future and you were just getting to grips with changing nappies and sleep deprivation!
When the child turns adult they can then choose to keep the money invested or withdraw. TwoZeroEighty believes that if you look after your own Child Trust Fund and invest it carefully, you can learn about money and create opportunities for yourself. Read more about their philosophy here. I think this continues the original plan where young adults take an interest in financial education which will help them make better financial choices throughout their lives.
If you have a teenager start talking to them about the CTF, get them actively involved. If you don’t remember doing anything about the CTF – don’t worry the HMRC would have invested it on your behalf. Therefore it is waiting for you and your to child to claim it. Simply fill in the form on the TwoZeroTwenty website and start the process of locating and taking control of this money as you find my child trust fund.