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Parents urged to give ‘the gift of future presents’ this Christmas

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Written by: Emma Lunn
12/11/2019
Parents who set aside £25 a month in an ISA for 18 years can gift their child £12,000 when they reach adulthood.

Parents facing the annual endurance test of present-buying over the coming weeks are being encouraged to save money for their offspring instead.

According to Royal London, the average amount that parents spend per child on Christmas presents is about £137.50.

But if parents, grandparents or other relatives choose this year to save the equivalent of this amount for their children every year through regular monthly deposits of £11.45, children could have a bigger gift of £2,824 to play with by the time they reach adulthood.

Those who can up their contribution to their children’s long term savings pot to £25 a month could invest the money instead. Investing £25 a month, assuming an average annual return of 8 per cent, would generate a pot of £12,002 after 18 years in an ISA.

Or for a true lesson in ‘deferred gratification’, £25 a month in a Junior SIPP for 18 years will boost their retirement savings by a whopping £147,798, when they reach 60.

Becky O’Connor, personal finance specialist at Royal London, said: “It might seem Scrooge-like to save for rather than spend on your children, but putting  money into long-term savings is truly far more generous than things that come in gift wrap over time.

“Even if your children don’t realise it now, they’ll appreciate these ‘future presents’ when they hit adulthood; for driving lessons, help towards university maintenance costs, or home ownership dreams.

“For parents who can afford to put a bit extra aside each month into their children’s long term savings, Junior SIPPs and Stocks and Shares ISA investments can yield enough to pay for some big outgoings, when they are older.

“If you tell them about where the money is going and show them the statements every year, this can be a good lesson in deferred gratification.”

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