Saving for your child’s future

14th February 2022

Many parents give their children a flying financial start by saving or investing throughout their childhood. A new survey1 shows mothers typically take the lead in this area, while cash remains disproportionately popular.

Mum’s the word

The research shows responsibility for children’s savings is particularly borne by mums: 60% of those actively contributing to a child’s savings and investments were found to be women. Researchers noted that this fits a broader theme whereby women tend to connect investing to outcomes for their family more than to their own needs.

The survey also highlighted a drop-off in contributions as children get older. While 67% of new parents start saving or investing for their new-borns, this figure falls to 54% by the time children reach secondary-school age.

Cash is king?

The efforts of parents to save for their children is clearly admirable, but it is important to make that money work hard. Most financial products held for children are in cash, with stocks and shares Junior Individual Savings Accounts (JISAs) making up just 3% of all accounts. The JISA recently celebrated its tenth birthday, and the allowance has increased over the years from £3,600 in April 2011 to £9,000 today.

In a high-inflation environment, sticking to cash can limit the impact of parents’ saving, as the real value of cash savings is likely to be eroded over time. While not guaranteed, investment products have historically delivered better returns over the long term. It’s advisable to consider the options.

1Boring Money, 2021

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.