Now the kids are back to school, I’m reminded of uni days when no-one bothered to get on with any work until it was critical. In fact, I don’t remember either myself or any of my friends starting a task on the day it was set. I do however remember staying up until 4 am the night before the tutorial, eating spoonfuls of Nescafe and trying to elucidate the finer points of Hamlet. Unnecessary drama – that’s not just the Shakespeare – because with a little organisation I could’ve avoided the essay crisis.
While English literature and saving are two different disciplines, the principle that earlier is better is similar. Because many savings accounts are linked to yearly tax allowances, they have to be added to or opened within the tax year. Confusingly, this is not the calendar year but runs between 6 April of one year to 5 April the next. So a sort of early April deadline for finalising all your savings plans has been created.
Of course, you don’t have to wait until then to put money away, as I had to remind Auntie A the other day. She had some spare cash, earmarked for her kids, going stale in a low-interest bank account. As we talked, she realised it would be better off being invested straightaway into shares via a tax-efficient Junior Isa (Jisa) than lingering for spring. And, if you want to save for your kids, here's some other reasons why you should consider doing the same:
1. Why delay? The end of the tax year is a busy time. Doing a Jisa now is one less straw on the back of whoever is responsible for paperwork and ensures that person isn’t so overburdened they don’t do it.
2. You’ll only spend it otherwise. There’s seven months to go before April starts. There’s all sorts of diversions that money could take.
3. Get the Jisa open before Christmas. Then you can encourage relatives to put money into the Jisa (the limit is £4,128) as a gift rather than just adding to the plastic pile.
4. The investment argument. There are lots of stats which show the earlier you invest, the better the return. It makes sense without looking at the figures: the sooner you put the cash in, the quicker the interest/gain comes out.
5. You won’t forget. Like any busy mum I’ve got a long list of Things to Do. Items do mainly get ticked off. Even so, there are a couple which have been there for seven years. Don’t let your finances become one of those!
For more details on how a Jisa can save you tax, see the SMM guide here.