A fifth of parents aren’t saving any money for the future

20 Jun, 2018

20 Jun 2018 A fifth of parents aren’t saving any money at all for the future, as high inflation, low wage growth, and low savings rates put pressure on families, according to new research from Zopa.

The survey also found that a higher proportion of non-parents (23%) weren’t saving for their future.

Zopa’s research of a matched sample of 500 parents and 500 non-parents uncovers the differing savings behaviours and attitudes between the two groups. The research has found that it’s primarily, although not exclusively, a lack of money holding most parents back from saving for the future. Over half of parents (55%) who don’t put money aside for their children say this is the case.

However, for one in five parents, the reason not to save for their kids’ future isn‘t one of money, rather that they want their children to make their own way in life financially.

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 that put money aside have an investment timescale of more than 4 years, suggesting they’re in it for the long run, whereas only half of non-parents are investing with a 4-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 savings account through their bank. This is followed by junior ISAs (34%), fixed term savings accounts (15%) and stocks and shares ISAs (9%).

A spokesman for Zopa, commented: “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.

“Unfortunately, the British public will struggle to find a savings account paying out interest higher than 2%, and with the most recent UK inflation rate being posted at 2.4%, 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. Investments such as the Innovative Finance ISA* provides a better return than traditional savings products with a bit more risk, so those saving or investing can feel better about their children’s future.”