I’m a money expert – here are five tips to make sure your child is a millionaire by retirement

A money expert has revealed five top tips to ensure your child has a million pound pension by the time they retire.

Despite having a baby, which means your cost of living has gone up but your disposable income has gone down, that doesn’t mean you have to be broke.

Megan Jenkins, a chartered financial planner and partner at wealth management firm Saltus, offered advice on supporting children financially.

She outlined how parents can prepare for university costs or a deposit for their child’s first home – and how a newborn can retire with a million-pound pension.

It comes on the heels of the viral Project Mbappe meme, which saw parents commit to imposing tough training sessions on their children in a bid to fuel their meteoric rise to stardom and wealth after Kylian Mbappe won the soccer World Cup.

The financial expert said the hardest part is realigning the lifestyle the parents once enjoyed and possibly the reduced income they now have.

It could mean rethinking your spending on new or expensive toys or clothes and opting for second hand.

She explained: “A child can have a pension from birth – there is no minimum age.

“Only a parent or guardian can open a pension for a child, but once it’s up and running, anyone can contribute – parents, grandparents, godparents, friends or other family members.

“Youth pensions are a very tax-efficient way to build a retirement nest egg for your child through the power of compound growth.

“Setting up a pension as early as possible means that even small contributions have more time to grow, and even though your child is decades away from retirement, you’ve helped secure their future financial well-being.

“The maximum you can save each year in a junior pension from birth to 18 is £3,600, this includes up to £720 tax-free, which the government pays, and up to £2,880 of pounds from family members or individuals.

“Pension control automatically passes to your child at 18, however the money is locked in until retirement age (usually accessible from 55, but will be 57 from 2028).

“However, by delaying access to the money until age 65, your child could retire with a £1 million pension through compounding power (five per cent each year until age 65 , would equate to over £1m.This is potentially a return of over 2000 per cent.

She told the new mothers and fathers not to be shy to ask their parents for financial help – through pensions.

“If there are plans for grandparents to leave their property to their children, they may look to leave some money to grandchildren through their pensions as a way of transferring wealth to the next generation.

‘The attractiveness of leaving a pension to the grandchildren is that depending on the age of the grandparents when they die, if the grandparents are over 75, it is taxed at the beneficiary’s marginal rate.

“So if you’ve got a minor child or a university child who’s getting money from a pension, they can access it virtually tax-free because they’ll have their personal allowance of £12,570 a year which they can also use this this will allow them to phase it out.’

She gave the example that if a grandchild inherited £50,000 from their grandmother’s pension, that money could be used to fund three years at university, taking £12,570 a year tax-free.

Ms Jenkins advised parents to set up a Junior ISA, allowing different family members to contribute.

She said: “You can start using this as a way to help pay for university and if a child decides not to go to university, it’s a down payment on the first property deposit. You can save up to £9,000 every tax year and it’s tax-free money.

“Family members can contribute as much or as little (depending on a provider’s terms) as they want to the account, and it will undoubtedly be more beneficial than buying the child a material gift. Instead, put away for the long term, which they’ll appreciate when they’re 18 — though not as much now.

Other helpful tips included family income protection or a family income benefit policy and updating your will.

She said: “In the early years the cost of childcare and raising a child is high and so a family income benefit policy is insurance worth having. The policy will provide additional income if one of the parents dies before your child turns 18.

“Although the initial cost of the policy may seem steep, for example you might want £20,000 a year until you’re 18, you start with £360,000, but if you died after 10 years it’s £120,000 instead of £360,000 pounds, so the cost is a lot. cheaper because the amount of sum assured paid by an insurance company is much less, but it matches the maintenance costs of giving birth to a child, in case one of the parents dies.

“It’s also important to make sure your will is up to date, including the letter of wishes that goes with it.”

Other parents in the UK are embracing the irritating craze of training their children to become skilled football prodigies from a young age and hopefully enjoy the same meteoric stardom as French ace Kylian Mbappé.

The 25-year-old, considered one of the best players of his generation, had already won the World Cup and four Ligue 1 titles by the time he turned 21.

He is expected to leave current club Paris Saint Germain in the summer, with Spanish giants Real Madrid his likely destination.