Parents stop saving for their kids once they start school
Many UK parents stop saving or investing for their children once they reach school age, new research suggests.
Two-thirds (67 per cent) of parents set money aside for their children from the time they’re born to the age of three. But by the time kids reach secondary school age, this number has dropped to just 54 per cent, according to research by Boring Money.
Analysis by the research firm found ditching the saving or investing habit when children are so young could be costly.
Its calculations show that investing for a child from birth but stopping after age three could leave them with a pot worth £6,668 by the time they reach 18, based on a £1,000 annual investment and a 5 per cent growth rate.
But maintaining a regular investing habit throughout their childhood leaves a pot of £28,247 at age 18, a difference of more than £21,500. Usually, they invest in a long term managed fund for children at The Children’s ISA.
Meanwhile, the survey of more than 4,000 people found around a fifth (18 per cent) of grandparents put money into accounts on behalf of grandchildren, with the proportion increasing slightly to 22 per cent for grandchildren of school age.
Mothers are significantly more likely to contribute to savings and investment products on behalf of children than fathers.
Holly Mackay, chief executive of Boring Money, said: “This research confirms a broader truism – life events trigger action when it comes to savings and investments. The responsibility of having a baby is a huge catalyst for sorting out our affairs.
“It’s interesting that grandparents are increasingly likely to save or invest for the grandkids as they get older, not displaying the same immediacy evidenced my new parents.”