If you've got children, chances are there's a piggy bank or two floating around the house – metaphorical or otherwise. The question is, do you raid them? According to research from Santander, a third of people do…
The figures show that 32% of those surveyed are secret piggy bank raiders, with these parents admitting to taking money from their children's savings in order to pay for something for themselves. Paying for an unexpected bill was the most common reason for doing so (44%) while 40% took the cash to cover living expenses, and a further 41% used the money to pay for something for the child.
However, some parents had slightly less scrupulous plans for the money – 28% used it to pay for a car and a similar amount (26%) wanted it to pay for a holiday, while 21% used the cash for another luxury or big ticket item and 15% had it marked to cover home improvement costs.
Not all parents will return the money to the rightful place, either, as although 49% of raiders put the money back as soon as they could, 19% said they intended to pay it back but didn't, and a further 15% admitted to having no intention of paying the money back at all.
For some parents, the need to raid the piggy bank could simply be the result of the rising cost of living, which could also explain why many are unable to save for their child. One in five parents (19%) surveyed have never set up a savings account for their children, while 39% of those who have admitted that they've stopped putting money into it, with 73% saying it's because they can no longer afford to.
However, saving for children doesn't have to require significant investment – even putting aside little and often can make all the difference, particularly when 18 years of compound interest is added into the mix, and it could mean you're able to build up a healthy savings pot for your child to put towards university costs, the first car or even a house deposit.
The average amount parents put away for their children is £23 per month, and even that can quickly add up. "Regularly putting money away, however little, and building a savings habit has a hugely beneficial long-term impact," said Helen Bierton, head of savings at Santander, and encouraging children to get in the habit too could be even more beneficial.
The question is, what type of savings account should you set up for your child? There are certainly plenty of options – Santander's research found that 49% of parents surveyed have set up a normal savings account for their children, while 36% have set up a Child Trust Fund and 20% have set up a Junior ISA. Any one of these could be suitable, but arguably, a Junior ISA should be the first port of call.
These accounts are completely tax-free and allow up to £4,080 to be saved in the current tax year, and what's more, their savings will still be exempt from tax even if they get a job at 16 and become a taxpayer. As an added bonus, savings from a Junior ISA can't be accessed until they turn 18, so you can't be tempted to raid it either!
These accounts also tend to offer better rates than traditional children's savings accounts (with a few exceptions), and now that the rules allowing Child Trust Funds to be transferred to Junior ISAs have come into force, it's a great time to consider your child's savings options – and if you can find a great rate for your own savings, too, hopefully you won't be tempted to raid the piggy bank too frequently in the future!
Compare children's savings accounts
Find the best savings rates
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.