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Are you saving enough for your kids?

Any parent will want to save for their kids, whether it’s for their first car or to pay future university or college bills. Yet a new survey suggests only a third of parents are actually saving on a regular basis.

Almost half (47%) of parents are managing to save occasionally. Those that do save are managing to bank an average of £561.11 a year, made up of parental contributions, birthday and Christmas money, child benefit and wages from chores. Grandparents also play their part, contributing more than a sixth of the annual total saved.

Are parents saving enough?

More than a third (36%) of parents are concerned they aren’t saving enough, making them worry about whether their children will ever be able to afford their own home or get by on their own.

 Top reasons parents save for their children

  • A fund to get them started when they grow up (41%)
  • Money towards further education (23%)
  • A house deposit (8%)

Source: Nationwide 2016

The Nationwide Building Society survey also found parents hope to save an average of £10,571 by the time their child reached 18 years old, though two in five only expected to build a fund of £5,000 or less.

For some, it’s difficult to even save a little. Of the one in five who aren’t saving, three quarters say it’s because they just don’t have enough money to do so.

Where to save the money

Most parents (42%) are putting the money in a bank account, while a third (36%) use a Junior ISA or Child Trust Fund. The piggy bank is used by just 3% of parents.

In theory the tax-free ISA option will be the best way to get more for your investment. But as with all savings accounts at the moment, the interest rates are currently really low. The website Moneyfacts found rates have tumbled in recent weeks, especially on some Junior ISAs.

This shows the importance of shopping around for the best account, and checking the rate you are getting on your existing savings account.

Get kids involved, whatever you manage to save

Andrew Johnson, money expert at the Money Advice Service, says even a small amount of savings can benefit a child.

“If parents are in a position to save on behalf of their children from an early age, children are more likely to be in a financially secure position when they start managing their finances. Try to include your child in the process while you’re saving for them too, to help them understand the importance of savings and good money management from a young age.”

Video: How can you talk to your kids about money?

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