Zopa: Bank of Mum & Dad closed for child savings
THE Bank of Mum and Dad appears closed when it comes to parents helping their children start saving or investing, Zopa claims.
A poll by the peer-to-peer lender found a fifth of parents are refusing to put money aside for their children because they want them to make their own way in life financially.
The research among 500 parents and 500 non-parents found 55 per cent of those with children are unable to save for them due to a lack of money, but another 20 per cent said they want their kids to learn to save themselves.
The research also found those with children were still likely to be saving, with 23 per cent of non-parents failing to put any money away for the future, compared with 20 per cent of parents.
Parents are more likely than non-parents to think long-term when putting money aside, according to the poll, with two thirds having an investment timescale of more than four years, whereas only 52 per cent of non-parents are investing with the same horizon in mind.
When it comes to parents’ saving methods, despite the UK’s rock-bottom interest rates, half who are saving money for their child use a savings account through their bank and 34 per cent use junior ISAs. Fixed term savings accounts and stocks and shares ISAs were used by 15 per cent and nine per cent respectively.
“With wage growth slowing, interest rates still low and inflation high, it’s a tough savings environment out there,” Andrew Lawson (pictured), chief product officer at Zopa, said.
“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 two per cent, and with the most recent UK inflation rate being posted at 2.4 per cent, 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.”
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