Free money for your kids!
Here's some free money for your children....What do you mean, no thanks?
It has to be one of the best sales pitches in history: "Free money for your kids!" I mean, who could resist?
That's the selling point of the child trust fund (CTF), which is now celebrating its seventh birthday.
Yes, free money for your kids, £250 when they are born, and another £250 when they turn seven. And if you are a low income family, they get £500 a pop.
If this is news to you, and you now think "free money for your kids" sounds suspiciously like politicians trying to buy popularity with our own money, then you're right: that's exactly what it is.
But I still think the CTF is a great idea, and not only because I have a daughter of my own, and have claimed my £250. That's because if we have to start rebuilding the savings culture in this country, we have to start at the beginning.
That means with the kids.
Now we are seven
Every UK child born after 1 September 2002 is eligible for a CTF. Family and friends are then free to contribute a further £1,200 a year, with all returns free of tax.
The money can be invested in cash or stocks and shares, and belongs to the child, who can't touch it until they turn 18.
Best of all, Jane Baker has done all the hard work of explaining how to turn CTFs to your child's advantage in Seven ways to boost your child's savings, so I don't have to.
Please don't let this opportunity go begging. Just imagine the trouble that lies ahead if you do.
In Gordon we trust
It's your child's 18th birthday in, ooh, 2022. Their best friend just pocketed £7,000 in their CTF, and aren't keeping quiet about it. You couldn't be bothered topping up your kid's CTF, which means your offspring has the original cash the government gave them, plus a little bit of interest.
They're not happy, and rightly so.
In other words, Gordon Brown, in his stint as Chancellor, did more to save for your kid's future than you ever did. It is no good telling your child he trashed the economy, because they won't want to know.
All they will know is that their bezzie mate has seven grand in the bank, and they don't. For a few days, they will like Gordon Brown more than they like you.
Think about it.
And yes, I am trying emotional blackmail.
Who are you kidding?
Every time I write an article urging people to save, people point out that not everyone can afford to save, because they are on benefits, or in debt. And of course they're right.
But lack of money isn't the only reason people don't save, and here's the proof. More than one in four parents haven't bothered to set up a CTF. That means a quarter of the population can't be bothered saving - and for their kids! - even if you give them the money to do so.
What's going through their heads?
"Free money for the kids? Wassat for? Load of rubbish. What, they can't touch it until they turn 18? Nah. You can stuff your free money."
The main excuse is that they "haven't got round to it yet", which is just as feeble.
The Government has made setting up a CTF even easier, by allowing parents to take one out online or by phone, without having to go to the trouble of returning a voucher.
There has also been talk of incentivising early uptake with a free gift or bonus.
Short of getting Alistair Darling to deliver each CTF in person, I can't see what more they can do.
Not doing it for the kids
Even those parents who have set up a CTF have proved pretty dismal at paying money into it. At least the government has set up a default system, so that kids won't lose their money altogether.
I don't wholly the blame parents. CTFs, like Isas, are unnecessarily complex. Why introduce the confusing split between stakeholder and non-stakeholder schemes, for example?
They should have been kept clear and simple, but as anybody who has claimed tax credits will testify, that isn't Gordon Brown's trademark.
Even so.
The kids are alright
Ironically, Gordon Brown's biggest victory in the battle to get children saving wasn't the CTF, but the credit crunch.
The recession is developing a younger generation with a more responsible attitude to money than their parents, according to new research from The Children's Mutual. Two-thirds of parents say their seven-year old children are better informed about money than they were at the same age, and half had saved up for something specific, such as a computer game.
Parents have also learned to say no to their children more often, and said recent hardships would make their children more "astute and responsible" towards money.
The Children's Mutual even appropriates the old Jesuit quote about the importance of the formative years: "Give me a child at seven and I will show you a saver."
We desperately need a new savings culture in the UK, and now we know who is going to spearhead it. Leave it to the kids. It looks like they will do a lot better than their parents.
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