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Parents facing child savings shortfall

Parents facing child savings shortfall

Category: Savings

Updated: 27/09/2011
First Published: 27/09/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Children hoping for a healthy windfall come their 18th birthday could be in for a disappointment, as many parents are struggling to save anything for their offspring.

There are also plenty of struggling parents that have had to cut their contributions to their children's savings accounts as the cost of living has spiralled.

The worrying figures, which come from the Co-operative Bank, show that more than a third of parents (36%) have not set up a savings account for their child or children.

And with the cost of many teenage life events such as learning to drive or going to university soaring in cost, many children could face a testing financial future.

Findings show that the average amount saved by parents for their children is £10 a month.

A lucky minority of children are having £50 or more squirreled away for them each month.

But according to James Hilton, head of savings at the bank, putting even a tenner aside a month is worthwhile.

"It might not seem a lot, but saving as little as £10 per month for your child is definitely worthwhile and will help them out in later life," he added

Having abolished Child Trust Funds, the Government is forging ahead with its Child ISA scheme, which is due to be launched in November.

"Hopefully the introduction of tax free savings for children will encourage more parents to put a little aside for their kids," said Mr Hilton.

With many students facing university tuition fees of up to £9,000 per year from 2012 and the average age for first time home buyers on the rise, the majority of parents are plagued by savings guilt.

As many as 65% of mums and dads said they wished they could save more for their children's future than they can currently afford.

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