Most parents save for all their children
Over eight in 10 parents (81%) have set up some form of savings vehicle for their children, up from 76% in 2012. The likelihood to save for children appears to have increased over the past year. Not surprisingly, the more children parents have, the less likely they are to be able to save for all of them. 73% of parents with one child report taking out a children’s savings product for the child, while 66% of parents with three or more children say they have taken out products for all their children.
Three main motives for taking out a children’s savings product
Parents are motivated by three main factors when deciding to take out savings products for their children:
- 60% of parents (up from 54% in October 2012) say that a reason for taking out savings products for their children was to teach their children how to manage and control their money.
- 48% of parents took out savings products to help their children buy something for the future (e.g. to save for a deposit on a first home).
- 54% (57% in October 2012) say they took out children’s savings products to give their children a head start.
Economic rebound likely to boost savings – and providers can also help
Over half (51%) of parents who only save for some but not all of their children said they would consider extending their saving to all their children in the future. Among parents currently saving for their children, their main desire (41%) is to see savings providers paying higher rates of interest on their products, plus better value for money (17%), which is related to higher returns.
Providers can improve their offer by offering better customer treatment (appeals to 20% of parents currently saving for their children), offering better account/product access (20% of parents) or by becoming more child/parent-friendly (16% of parents). Collectively, the three factors – better access, improved friendliness or better customer treatment – hold appeal to 40% of parents.
Additionally, 60% of parents whose children own a savings product would like to see providers offer products that smooth out the transition of the child from saver in children’s products to saver in adult products.
Most child savers get regular deposits
Almost eight in 10 parents state their children’s savings products receive deposits on a regular basis, with six in 10 receiving lump-sum deposits in the past year. Parents, followed by grandparents, are the main depositors into children’s savings products. For most parents, their children benefit from both regular and lump-sum deposits to their accounts.
On average, respondents’ children have £3,009 in their savings products, although half of children have £1,126 or less. On average, parents invested almost £900 into children’s savings products last year. The average sum saved in children’s savings accounts is £1,843 per child.
Savings set to rise in the future
The amount held in children’s savings products is forecast to rise in the future, driven by rising children numbers, improved economic conditions and the expected ability to transfer into Junior ISAs monies held in Child Trust Funds. Between 2013 and 2018, the sums held in children’s savings accounts are forecast to rise by 20%, to over £22 billion.