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New research from Zopa has found that 20% of parents aren't saving money for their children's future, with many unable to afford it, but some saying they simply want their children to be able to make their own way in life. However, parents are still doing better than non-parents, with 23% of this group not saving for their future.
Of the parents who aren't setting anything aside, 55% said it was because they lack the money to do so, while one in five aren't saving for their children's future because they want them to stand on their own two feet. Regardless of the reason, Andrew Lawson, chief product officer at Zopa, recognises that: "With wage growth slowing, interest rates still low and inflation high, it's a tough savings environment out there" for those who can afford to set some funds aside.
Indeed, despite recent news of a boost in the number of ISA products and the one-year bond rate having reached a two-year high, the rates on offer are still not much to write home about, and many are making things worse by using uncompetitive accounts. Specifically, 50% of parents said they're using a savings account attached to their bank, compared to the 34% who are using a Junior ISA, 15% who use fixed term savings accounts and just 9% saving in a stocks & shares ISA.
For those who don't want to risk their money on the stock market, the highest rates can currently be found on Junior ISAs, followed by long-term fixed rate bonds. While some savings accounts linked to current accounts can certainly offer competitive rates, most offer variable rates that are much lower than the best easy access account rates on the market.
So, even if you can only afford to set aside £5 per month, make sure you're putting it into an account that can offer a decent rate of interest. And if you've got a larger pot that you're happy to set aside for as much as 10 years, why not consider a stocks & shares ISA?
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