IMAGINE being able to present your child with a gift of £100,000 on their 18th birthday?
While this might sound like a pipe dream, it can be achievable.
Sarah Tucker, founder and managing director of The Mortgage Mum, has revealed her top tips to help parents save.
The money expert and mum-of-two said there are lots of different ways people can save money – but there’s also lots to think about too.
She said: “After appearing on The Voice UK in 2019, I used my platform to create a space for women in the mortgage industry.
“There are not enough female brokers, and I believe that’s what the world needs.
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“I have been a mortgage broker and money expert for six years, and I found my way here by experiencing my own blocks with money.
“People tend to think mortgage brokers and financial service professionals ‘have it all figured out’ but we have learnt through our own lessons and experience.
“Money is hugely emotive, and truthfully it can change your life. It can make things feel more difficult, and it can equally make things feel lighter and more joyful.
“I love helping people work out their money blocks, gain financial awareness and knowledge, and then create more joy for themselves in the process!”
The CeMAP Qualified Mortgage Broker revealed some parents want to be able to save £100,000 so they can buy a house for their kids when they turn 18.
But she explained that the property market has a lot to answer for in recent years, especially when it comes to first time buyers.
She said some parents are feeling the pressure now more than ever to buy property for their children in the future.
Sarah said: “In recent years it has become increasingly difficult for young first-time buyers to get on the property ladder without help from the ‘Bank of Mum and Dad’.
“For one, they need a substantial deposit! We have seen parents gifting deposits to their children now more than ever before.
“In fact, if the Bank of Mum & Dad were an actual mortgage lender it would be in the top 10 in the UK. So the pressure is real!
“I personally feel we have just as much responsibility to our younger generation to help them to learn about the mechanics of money and mortgages, as well as the mindset. It’s all linked!”
If you want to save the value of £100,000 for your child’s 18th birthday it’s not as simple as saving £5,000 to £6,000 a year for 18 years, revealed the money expert.
Sarah explained that inflation will kill the dream because what £100,000 can buy you or your children today will be very different to what it can buy them in 18 years.
Money is hugely emotive, and truthfully it can change your life. It can make things feel more difficult, and it can equally make things feel lighter and more joyful.”
She suggested that your savings goal needs to increase each year with inflation.
SORT YOUR OWN RELATIONSHIP WITH MONEY FIRST
Invest your time and energy into your own knowledge, because there is no point in gifting cash without gifting the right lessons to go with it, advised Sarah.
She said: “Ask yourself, ‘what is my relationship with money?’ Complicated? Healthy?
“There are so many tools out there to explore this because honestly, our relationship with money often reflects the relationship we have with ourselves. It’s crazy how linked it is.”
START SMALL AND BE REALISTIC
Start small and be realistic, advised the money expert. Sarah said parents can open a specific savings account and name it ‘their child’s name’s first house.’
This way, every time they see it, it will reinforce the plan, and as they watch their pot grow it will motivate them to continue.
She suggested that banks such as Starling offer this facility. It’s a good idea to set a short term, medium term and long term goals.
“LIFT AS YOU CLIMB”
As your money grows, give a little more, said The Mortgage Mum founder Sarah.
She said: “Don’t give from an empty pot at your own expense. Grow your savings together!”
Consider investing your money – in stocks and shares, or in property, suggested Sarah.
She said: “A buy to let property can prove a very worthwhile investment for your children’s future. You need a 25% deposit to get started, but it’s easier than people think.
“You can invest on behalf of your children if you have £100 saved.
“Take the time to learn about how you can grow your money pots in different ways, or invest in an expert to help you.”
“A buy to let property can prove a very worthwhile investment for your children’s future. You need a 25% deposit to get started, but it’s easier than people think.
There’s no harm in adding some manifesting magic, said Sarah as she encouraged parents to be open-minded.
Parents can set daily reminders on their phones, make their savings goal their password and screensaver, find ways to let the universe know what they want.
She said: “Keep reminding yourself of your goals in a way that doesn’t feel like hard work and believe it’s possible. Set your goals and use the law of attraction to add fuel to your fire!”
OPEN AN INSA
Earn the best interest you can while your money grows, by opening an ISA, advised Sarah.
She said: “And open child ISA’s too. You can also invest in a Lifetime ISA when you’re 18 and over, and the Government will add a 25% bonus to your savings.
“This is also suitable to use when you’re saving for retirement.”
CONSIDER PREMIUM BONDS
With premium bonds, there will be no interest earned and instead, you’ll be entered into a prize draw every month where you can win up to £1 million tax-free.
This can be a fun way to save, encouraged Sarah.
The Mortgage Mum and money expert also reiterated that the education around money is just as important as the money itself. The Mortgage Mum believes schools need to teach this.
Topics such as mortgages, money and mindset should be spoken about from a young age.
She said: “Simplify it for them and include them in the process. Don’t make money a taboo topic in your home!
“I speak to my children about investing their money. We explain it using the concept of Lego or McDonalds, something I was taught by a great writer, Will Rainey.
“I also speak to them about saving their money, using his concept of money trees. They grasp these concepts better than we do!
“If you can do this when your children one day receive their money, they’ll (a) appreciate it and (b) they’ll know just what to do with it!
“And finally, please take the pressure off. Your job as a parent is to love your child. To provide for them until they are an adult, and to equip them with the tools to explore the world safely.”
Sarah added that you can do this without saving £100,000 – instead, she encourages families to learn about money and grow together – and see where that journey takes you!
I speak to my children about investing their money. We explain it using the concept of Lego or McDonalds, something I was taught by a great writer, Will Rainey.