Last week it was revealed that Harry Potter star Emma Watson still gets pocket money from her parents even though she has amassed a fortune of around £10 million from her film career.
The 17-year-old told Digital Spy that she gets a monthly allowance which "makes her feel normal". She added that "he insists, and to be honest, I appreciate that".
"Dad really helps me because he doesn’t want me to live this completely different, crazy life. I’m not spoilt."
Ms Watson – who played the character of Hermione throughout the Harry Potter series – cannot access her movie earnings until she turns 21.
Saving for your child’s future
The £10 million balance aside, there are echoes of the child trust fund (CTF) about Ms Watson’s arrangement.
A child trust fund is a savings and investment account for children, which is opened with a £250 voucher that the government provides to every child born on or after September 1st 2002.
Although the account belongs to the child, it can’t be touched until they turn 18, so that children have some money behind them to start their adult life.
Granted, it isn’t likely to approach the astronomical sums that the teenage film stars are amassing and putting aside, but it is still a valuable asset for young Britons.
Savings, shares or stakeholder?
There are three types of child trust fund – savings accounts, accounts that invest in shares and stakeholder accounts.
Savings accounts are a straightforward savings model that hold all the money put into them and add interest to it. With accounts that invest in shares, the money deposited is invested in the stock market, so the final balance of the account will be dependant on 18 years of share performance.
Stakeholder accounts are similar, in that the money is invested in shares. However, certain provisions are made to make the investments ostensibly safer, including spreading investments and moving all investments to lower-risk assets when the child turns 13.
Looking to the future
Child Trust Funds encourage parents to look ahead to their child’s future and consider "what the world is going to be looking like in 18 years", a spokesperson for Family Investments said today.
Miles Bingham said that Child Trust Funds – a "long term investment" – "fit well with ethical investing" as they allow the parent to look ahead to when their child is 18 and consider "how much the world has moved on" in terms of ethical issues.
He added that many parents of today are "looking for the ethical option or the organic option" for every choice they have to make for their child.
It’s a big bad world out there
What about when the child reaches maturity? At 18, many will be taking their first steps into the adult world, be that full time employment, university or a vocational course.
Whatever path they chose, at 18 they begin to be bombarded with offers of credit and loans. Anecdotal evidence suggests that people in their late teens don’t always make the most sensible choices when it comes to accessing credit and taking on debt.
National Debtline, a charity that offers free and impartial advice on debt, believes that it is important for young people to have "financial literacy and budgeting" in place in order to manage credit responsibly.
More debt education needed
Spokesperson Becky Boden-Wilkes says that there needs to be more debt education for young people: "It is important to learn how to budget and how to use credit responsibly. Debt isn’t a bad thing by any means, most of us use credit and have a personal loan, credit card or mortgage – credit is there to get you through the ups and downs."
However, she adds that "there does need to be more education into how financial products work, so that young people understand if they’ curly re taking out a personal loan of £5,000, what is the APR?"
Compare Child Trust Funds