A fifth of parents are not saving any money at all for the future, as high inflation, low wage growth, and low savings rates put pressure on families, a report has claimed.
However, for one in five parents, the reason not to save for their offspring’s future is not a financial issue, but instead that they want their children to make their own way in life financially. More than half of mothers and fathers, however, said that a lack of money is holding them back from saving for the future.
The study, from financial services firm Zopa, also found that non-parents are equally likely to fail to save anything, with one in four people without children saying they do not put aside any cash for savings.
Andrew Lawson, chief product officer at Zopa, said: “With wage growth slowing, interest rates still low and inflation high, it’s a tough savings environment out there.
“However, for parents that are able to put money away each month there are options to ensure they are making the most of their money.”
Although many parents are struggling to find the money to put aside, they are more likely than non-parents to think long-term. Two thirds of parents who do put money aside have an investment timescale of more than four years, suggesting that they are planning for the future, whereas only half of non-parents are investing with a four-year timescale in mind.
When it comes to parents’ saving methods, despite the UK’s rock-bottom interest rates, half of parents who are saving money for their child use a traditional savings account through their bank, according to the survey, which quizzed a sample of 500 parents and 500 non-parents. This is followed by junior ISA, fixed term savings accounts and stocks and shares ISA.
Mr Lawson added: “Unfortunately, the British public will struggle to find a savings account paying out interest higher than 2 per cent, and with the most recent UK inflation rate being posted at 2.4 per cent, anyone using one of these accounts as their primary ‘long-term’ savings vehicle can most definitely find a better route. Parents in particular, should be looking to utilise a variety of products for their children’s financial future.”