When my son turned 12, he decided he wanted to buy a bright orange Lamborghini, a real one, not the Lego model he had just built. My daughter decided that a unicorn would be her first significant purchase.
These sort of childhood goals could account for the reason so many parents shy away from opening a Junior Isa. After all, any money saved in the account legally comes under the child’s control at the tender age of 18. I know what I was like at 18, and the idea of my own teenagers taking control of a lump sum without any restrictions was enough to make me balk.
However, at 18 almost 40 per cent of the UK population will take on a loan of about £53,000 with an expectation that they will manage rent, bills and budgeting with zero preparation for how to handle such a large sum of money. This is the main reason that I view the Junior Isa as an invaluable educational tool, rather than a spending time bomb.
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It’s not a fringe product. In the 2022-23 UK tax year, about 1.25 million Junior Isas were subscribed to — collectively amounting to £1.5 billion in contributions. What’s more, about 70,000 children had the maximum £9,000 paid into the account that year, a 45 per cent jump on the previous year. Some children even hold six-figure balances. This isn’t about indulgence, it’s about harnessing the power of compounding.
