Essential Personal Finance Chapter 11 Help from your family © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Contents Introduction Teaching you to fish! Investments for children Cash flow Saving habit Budding entrepreneurs Investments for children Help buying a home Gifts and bequests Inheritance Trusts Conclusions © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Introduction Financial education Help with housing Savings and investments Gifts and bequests © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Teaching you to fish! Financial education Help with housing Savings and investments Gifts and bequests © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Cash flow Figure 11.1 An example of cash flow during your working life © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Cash flow tips ? ? ? ? ? ? © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Cash flow tips Standing orders and direct debits for bills Use a cash flow app Cut non-essential spending Check balance before you buy Save rather than borrow Only borrow to increase future resources © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Saving habit Pay yourself first Standing order to savings account Make targets concrete – size, timescale Set milestones (mini-targets) Share your goal Review regularly and switch for best returns © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Saving habit: concrete goals © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Young entrepreneurs Business structure Taxes School initiatives © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Investments for children Financial education Help with housing Savings and investments Gifts and bequests © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Investments for children Savings product – saving habit, money management Tax-favoured savings and investments (tax wrappers) But children might not be taxpayers anyway Gifts from parents – UK anti-avoidance rules Investment term – risk and return Asset-based welfare – social mobility © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Help buying a home Financial education Help with housing Savings and investments Gifts and bequests © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Help buying a home Help with mortgage Help with deposit ? ? ? ? ? ? Other help ? © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Help buying a home Help with mortgage Help with deposit Other help Gift: lump sum Guarantor Gift: regular Family offset mortgage Loan Other family savings deposit Other help Pros and cons of each? Joint ownership © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Gifts and bequests Financial education Help with housing Savings and investments Gifts and bequests © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Gifts and bequests: inheritance (UK) Figure 11.2 Example of how Inheritance Tax works © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Gifts and bequests: trusts ? ? ? ? © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Gifts and bequests: trusts Trustees Trust Settlor Why use a trust? Beneficiaries © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne

Conclusions Types of help – financial education, homebuying, savings and investments, gifts and bequests Teach to fish (education) Cash flow – goal setting and planning over your life course Saving habit – set goals, prioritise, automate, commit by sharing, review Entrepreneurs – internet businesses, school initiatives, business structure and taxes Savings and investments – special schemes for children, tax (children usually non-taxpayers anyway), long-term so capital risk OK Help buying a home Deposit (gifts and loans) Mortgage (guarantor, family offset mortgages and similar) Other (joint ownership) Gifts and bequests – UK Inheritance Tax (7-year rolling gifts total, nil-rate band, many lifetime gifts tax-free) © 2017 Lien Luu, Jonquil Lowe, Jason Butler and Tony Byrne