As the Government allows parents to exit Child Trust Funds, which were scrapped in 2011, in favour Junior ISAs, new research suggests that nearly half of UK parents are not saving for their child’s future.
Research from price comparison website money.co.uk reveals that parents might need to find a whopping £259,000 to cover the costs of their child’s major life milestones.
These milestones include learning to drive, heading off to university, getting married and buying a first house.
However, further research has shown that 41% of parents don’t save regularly for their children’s future, while the average is just £34 a month. This would generate an estimated pot of just £10,395 by the time a child reaches their 18th birthday.
The average learner driver today takes 47 lessons costing a total of £2,393. In 17 years, this cost is likely to increase to £3,351. This would be potentially over a third of the average child’s savings pot.
Of those that do save for their children, over one in three (34%) would really like their children to invest this money in education and 21% in property. Only 12% would be happy for their child to spend their savings on a car and just 4% would condone spending the money on travel.
Unfortunately, for 28% of parents, saving for their children is simply an unaffordable option. Almost all mums in this group (91%) wish they could be building up a nest egg, compared with just two in three dads (62%).
Hannah Maundrell, Editor in Chief, money.co.uk comments: “While most parents dream of setting their children up for life, in reality the staggering cost is far too big a stretch for most consumers.
“That doesn’t mean saving isn’t worthwhile. By starting early and saving often, even if it’s only a little bit, parents could supercharge their child’s savings so they have a cushion to launch themselves into the big wide world.
“Choosing the right account is key, and the new freedom to move Child Trust Funds into Junior ISAs gives parents the perfect excuse to check they’re growing their children’s nest egg is in the best place. For many that will mean shunning cash savings in favour of investments for the first time. The risk may be significantly greater, over the long term so could the returns.”