Do childhood savers become more money-savvy parents?
Posted on April 1, 2019
In recent years it has become more apparent that Britons are saving less, which could be linked to the rising cost of living, as well as attitudes towards money seemingly being more focused towards the short term.
We commissioned a YouGov survey to dig a little deeper and find out more, especially considering the fact that one in four adults have no savings at all.
The main result? If you had savings when growing up, you’re 26% more likely to set up a plan for your own children.
The research also highlighted the importance of introducing children to saving money from a young age, beginning with parents giving their children pocket money to save in a piggy bank, building it up for that special toy or game they’ve been after.
In fewer cases, savings that are started earlier and left to grow can be used for early milestones including university fees, a first car, a deposit on a house or any other life-enriching experience.
So, is there a correlation between how our attitudes towards saving in childhood can affect our attitudes to saving for our children in the future?
The results showed that 85% of parents who saved as a child have established savings policies for their own children, whereas 59% who had no savings while growing up have nonetheless set up some form account for their kids.
This implies that parents up and down the country are looking to create a stronger financial future for the next generation, regardless of their own experience of saving while growing up. How does this look across different generations?
- Parents between the ages of 35-44 were most likely to have a savings account as a child
- 18-24-year-old parents were least likely
The response from the latter category may be the result of parents raising them in recent times of reduced financial security, post-2008.
Why open a savings plan for a child?
The benefits of saving from a young age are abundant. First and foremost, the earlier you start, the greater the potential final pot! Secondly, if you get your children involved, it allows them to learn about managing their money, as well as showing them the value - have you ever told your child or grandchild ‘money doesn’t grow on trees!’?
They will learn to understand how various savings accounts work, which will help towards their future financial independence. Receiving statements will also provide the opportunity to learn about how their money can grow, as well as making them more ‘money management’ savvy in their adult life.
Victoria Sully, a money and lifestyle blogger told us:
“We encourage our children to save their pocket money and birthday money because we want to ensure they are sensible with money as they grow up. I think it’s really important for parents to set a good example.”
What type of savings products do parents choose for their children?
Interestingly, 30% of those surveyed preferred instant access accounts.
But there are many other options available, including Junior ISAs (JISAs), Tax Exempt Savings Plans (TESPs) and Bonds.
If you want to make sure the child doesn’t get their hands on their money until age 18, the JISA may be worth considering. The cash and stocks & shares JISAs are both available, you need to pick the one that is right for you and your circumstances. You can save regularly, ad-hoc or invest a lump sum. You could pay in birthday and Christmas monies to save it from being wasted on toys!
Looking to your children's future
While not every parent has the means to nurture significant savings pots, even a small amount squirreled away on a regular basis can yield impressive results over a longer period.
Victoria went on to say:
“We are putting a small amount away each month into a savings account for each of our children, so when they are 18 they’ll have a lump sum to get them started on their journey into adulthood.”
Our survey highlights the importance of educating children on saving from an early age and with an array of products and JISAs available, there are lots of ways you can help secure your child’s financial future.
This blog provides generic information and opinions of the writer and should not be relied upon for making investment decisions. No advice has been provided by Sheffield Mutual. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk or www.vouched for.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand. Any reference to taxation is based on the writer’s understanding of current tax legislation and practice, which could change in the future.