We all know the challenges of trying to find a Christmas present for someone who already has everything. When it comes to children or grandchildren who are going to get piles of present under the tree this year, you may not know what to get. Thinking long term and setting some money aside for after the festive period has passed could be the perfect Christmas gift.
The average amount that parents spend per child at Christmas is £137.50. With other relatives and loved ones adding to this sum, children in your family could get quite the stack of gifts to unwrap. Whilst the excitement of new toys is part of Christmas for children, deferring gifts could have a far greater impact and boost their financial future.
Becky O’Connor, Personal Finance Specialist at Royal London, said: “It might seem Scrooge-like to save for rather than spend on your children, but putting money into long-term savings is truly far more generous than things that come in gift wrap over time.
“Even if your children don’t realise it now, they’ll appreciate these ‘future presents’ when they reach adulthood; for driving lessons, help towards university maintenance costs, or homeownership dreams.”
Still in need of some persuasion that deferred gifts could be the right option? Here are four reasons to consider them:
1. They have everything they need
Whilst children might want the latest toy or gadget, the fact is that usually, they have everything they need already. If you’re struggling to think of gifts they’ll still love to play with, in a few months’ time, looking further ahead could be the answer. Even if you decide to forgo presents or offer a token gift instead, they’ll probably still have gifts to open from other loved ones, so they won’t miss out on the excitement of Santa.
2. Give them a helping hand in the future
A look through the newspaper headlines and you’ll probably spot a story about how younger generations are struggling financially. Whether it’s low wage growth, student loans or housing deposits, taking steps to put money aside now can make things easier in the future. Remember, if you’re saving money in their name, they will usually be able to access it from the age of 18. As a result, it’s important to let them know what the money is intended for as they get older. Alternatively, you could save in your own name, ready for when it’s needed.
3. Make your gift go further
A £50 gift doesn’t typically go that far when you look at what it will buy and how long it will last. But keep adding those sums together, along with the benefit of interest or investment returns, and it can add up over the long term. When you look at the bigger picture, deferring gifts can mean your money has an even greater impact.
4. Teach them a valuable financial lesson
We’re often told to save for the future. Saving a little bit from this year’s Christmas budget for your child or grandchild’s future is a great opportunity to teach them an important financial lesson. Whether you tell them about the savings now or wait until they’re a little older, it can help reinforce the idea of saving for a rainy day.
Giving a deferred gift for Christmas
So, if you’re looking for an alternative to the usual colourful toys and treats that can be found under a tree, what are your options? Here are three to consider:
If you’d like to understand which options best suits your goals, please get in touch. We’re here to help you make the most of your finances, including passing them on to loved ones to support their future too.
Please note: The Financial Conduct Authority does not regulate NS&I products.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.