I get £18k in child’s benefit – it goes straight into bank, but trolls say the cash should go to someone who needs it
A MUM-OF-TWO has sparked fury after revealing she invests her £18k in child’s benefit instead of buying necessities.
26-year-old mother-of-two Shan took to TikTok where she explained why she doesn’t use child’s benefit on her children – however, the clip was met with backlash.
Shan revealed that ever since then ever since she started receiving the help from the government, she hasn’t ”spent a single penny” of the astronomical £18k total she reckons she’ll get by the time her kids are 18.
Child benefit is a four-weekly payment that’s designed to help with the cost of raising a child in the UK.
The benefit is worth £25.60 a week for your eldest child, and then £16.95 a week for any subsequent children.
For a family with two children who qualify, this adds up to £2,212.60 a year. For just one child, you get £1,331.20 a year.
The hitch for higher earners is that if one of the parents in the household earns more than £60,000 a year, you have to start paying some of the benefit back.
Once one of you earns more than £80,000 you have to pay it all back.
Shan told social media users that rather than spending the money on raising her two kids, she has decided to invest it by opening junior ISAs.
Junior ISA is a tax-free savings account for those aged under 18, where you can save up to £9,000 a year on their behalf.
Unlike an adult ISA, the savings cannot be touched until the child turns 18, at which point the funds can either be withdrawn by the holder or transferred into an adult ISA.
Saving such a large sum as £9,000 a year would be a stretch for many families.
However, even putting away smaller sums regularly will make a huge difference over time.
In the video, the 26-year-old also broke down the costs that land into her account each month.
”With two children in the UK, I receive £117.20 every single month in child benefit.
”Then each month, I transfer £85 into junior stocks and shares ISA for each of my kids.”
She went on: ”The account that I’ve got for both of my kids is with Hargreaves Lansdown just because they waved all of their fees for their Junior ISA product, which was really good.
”However, it is one I have to actively manage. So, I have to transfer the money in and then I choose what I invest in for my kids.”
In the informative clip, Shan revealed that she invests the child benefit in ”index funds, rather than individual companies”.
”The idea is, rather than just saving the money I’m actually helping to grow their money,” said Shan who’s hoping to reach an astronomical £36k by the time her kids are 18.
She explained: ”If I continue to put £85 into each of their accounts every single month, over the course of 18 years I will have put in over £18,300 into each of their accounts.
”However, hopefully with the power of compound interest […] over the course of 18 years that money will have grown from the £18,300 that I initially put in by another £18,500 in interest alone.
”That’s assuming a 7% annual return on their investments.”
Compound return is the rate of return for capital over a cumulative series of time.
Compound returns are a more accurate measure as compared to average returns to calculate growth or decline in an investment over a period of time.
For instance, if £800 is deposited with 5% simple interest, it would earn a little over £40 each year.
Compound interest, however, pays “interest on interest,” so in the first year, you would receive £40, but in the second year, you would receive £42 (£800 × 0.05), and so on.
How to claim Child Benefit
Child benefit is worth up to £1,331 a year for your first or only child and up to £881 a year for additional children.
This works out at £102.40 every four weeks or £25.60 a week for your first child and £67.80 every 4 weeks or £16.95 a week for their siblings.
There is no limit on the number of children that can be claimed for.
Applying is straightforward and can be done in minutes at gov.uk or through the HMRC app.
Parents with a newborn baby should make a claim online as soon as possible and could then receive their first payment in as little as three days.
You can also backdate claims for up to three months.
Parents can make a claim and then choose to opt out of receiving Child Benefit payments can still receive National Insurance credits if one parent is not working.
National Insurance credits build up your entitlement to the state pension.
Shan said: ”That is the power of compound interest. It’s definitely something I’m gonna teach my kids when they grow up and hopefully when they get this money, they will continue to invest it.”
‘You don’t need it, do you?’
Despite Shan investing the child’s benefit – which many dubbed a ”smart” move – the video has since been met with backlash, as some reckoned the mum clearly didn’t ”need” the financial help.
One person wrote: ”If you can invest it vs using it for necessities (its true intention) you don’t need it do you?”
A mum chimed in: ”Yeah i can’t afford to do that in this climate, it’s going straight ok nappies, berries and food.”
”Very pleased to hear my taxes have helped you out,” a furious viewer commented.
”This is another reason we are in such debt. Benefits should be given for those in need. If she doesn’t need it to ‘get by’ then she shouldn’t get it,” someone else agreed.
However, there were also plenty of those who praised Shan for helping her children’s future.
One woman claimed: ”My mum did this – but the time I was 18 there was £30k in there.”
A mum-of-four wrote: ”I wish I was in a position to not ‘use’ their money. definitely a life goal though.”
”We put in £30.50 a week (split between me and my partner – £15 each) then the £1300 a year from the child benefit, into a junior ISA for my LB [little boy] on 4% compound interest for 18 years; he will have £70k,” a fellow mother added.
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