Nearly three quarters (74%) of parents feel guilty they are not saving enough for their kids according to new research by leading financial mutual Scottish Friendly.
A study of 1,000 parents found that nearly three quarters (74%) of parents admit to feeling guilty about their children’s savings. Nearly nine in ten (87%) worry about how much they should be saving for their kids and four in ten (40%) say they could afford to save more.
The rate of interest paid on some children’s savings accounts currently exceeds 5.5%, but few parents are taking advantage of better deals. Seven in ten (70%) respondents say they have never switched their children’s savings into an account paying a higher rate of interest, while 41% admit they never shop around for better offers.
Despite this, six in ten (60%) expressed concern that the money they are saving for their children is receiving a lower rate of interest than the current rate of inflation. With price rises squeezing UK household incomes, many parents may be choosing between saving for themselves or for their kids.
Two-thirds (66%) of those surveyed say they are more motivated to boost their children’s savings than they are their own, compared to only 6% who say the opposite. Since the cost-of-living crisis began to bite in 2021, 28% of parents have increased the value of contributions into their children’s savings.
An almost equal proportion (29%) have reduced the amount they save, while 43% say their contributions have remained the same.
Kevin Brown, Savings Specialist at Scottish Friendly said “Parents naturally want to give their children the best start in life and to help them out financially at important moments. Whether it’s buying their first car, contributing towards their university costs or helping them on to the property ladder, there are variety of reasons why parents choose to save money for their kids.”
“The problem is often knowing how much you need to save and parents worry that they should be contributing more. This is a particular worry for parents at this moment in time as families’ disposable incomes are being tightly squeezed by inflation and rising mortgage costs.”
“One of the ways for parents to counter this, is to make the money they can afford to set aside for their kids to work as hard as possible for them. This could mean, for example, shopping around to find accounts paying the highest rate of interest, as the difference between the worst and best paying savings accounts could be significant.”
“Parents who are putting money aside for their kids to use in five to ten years or more, may also think about investing to try to beat inflation. Investing could offer growth potential but parents also need to remember that, as is the case with all investments, they could get back less than they pay in.”