Savings: Have you raided your children’s savings?


Have you raided your children’s savings?Educating your children about careful financial management, whilst encouraging then to save, is widely accepted as part of the modern parent’s role.

However, new research from Santander has shown that millions of parents might not be the best people to be educating their children about careful financial management.

The research, conducted by Santander, has shown:

  • 32% of parents have dipped into their children’s savings to pay for something for themselves
  • Less than half, 49%, of parents replace the money they take from their children, indeed 15% admit to having no intention of ever paying it back
  • Parents who raid their children’s savings are not doing so just to pay for essential items, but also for holidays and home improvements

If the report from Santander is correct, it isn’t just your children’s savings which are under threat though.

Saving for your children

Historically there have been three main reasons why parents have saved on behalf of their children:

  • To pay for private education or university
  • To help them buy their first house
  • To meet the costs of a wedding

Although people are less likely to get married and are nevertheless doing so later in life, the recent rise in house prices as well as the introduction of tuition fees, mean it’s never been more important to save for your children’s future.

Worryingly though, the research shows that a third of parents no longer save for their children.

What options are available for children’s savings?

If you want to build up a pot of money for your children, or indeed their grandparents do, you have a number of options.

If you want the savings to be held by your child, then you could look at a Junior ISA, which any child under the age of 18 can have.

Up to £4,080 per year can be paid into a Junior ISA, which can then be held on deposit, via a bank or building society, or invested into stocks and shares, usually via a fund manager. The money can also be split between deposit and stocks and shares.

Once your child turns 16 they can manage the money themselves and when they are 18 the Junior ISA will turn into an ‘adult’ ISA, providing tax-efficient returns until the money is withdrawn.

Some older children may have a Child Trust Fund (CTF), the forerunner to the Junior ISA, again up to £4,080 can be contributed each year. It is also possible to transfer a CTF into a Junior ISA.

In addition to a Junior ISA, or CTF, you could also consider traditional savings accounts such as fixed rate bonds for children.

We’re here to help

If you’re not saving enough for your children, or would like advice on making sure your savings are working hard enough for your children, we’re here to help.

Contact Bev or Sarah today on 0115 933 8433 and they will be happy to advise on the best options for you and your children.