Seven in 10 parents worry they are not saving enough for their child’s future

Seven in 10 parents fear they are not saving enough for their children’s future, according to a new report from Standard Life.

It found that parents with children under 18 face greater difficulties in setting aside savings for the future.

Nearly a third of parents with children under 18 say their financial situation is difficult, compared to 22 percent of people without children.

This is exacerbated by the second full year of high inflation and the cost of essential items such as food and household bills outpacing income increases.

For parents, this is combined with increased expenses related to childcare, schooling, activities, and increased housing costs.

Almost one in three people are spending savings or pensions ahead of schedule to cover household bills.

But there could soon be a respite from the monthly pressure for parents with very young children, after the Chancellor announced an extension of free childcare for one- and two-year-olds in the Budget.

Eligible parents of children up to nine months old in England will be offered up to 30 hours of government-funded childcare each week.

Meanwhile, parents on universal credit will see the maximum amount they can claim for childcare costs increased.

> See our guide on how to save and invest for your children’s future

Dean Butler, managing director of direct retail at Standard Life, said: “Even the smallest savings will help the family’s long-term financial wellbeing.”

‘It’s important that parents don’t completely sacrifice their own savings and retirement goals to focus solely on the here and now.

“Retirement may seem like a long road ahead, but thanks to the power of compound investment growth, the sooner you start saving, the more you’ll have when you get there.”

Some savings options for your children’s future include Junior Isas and children’s savings accounts.

Isas Junior

Junior Isas replaced Child Trust Funds in 2011. They allow parents to save tax-free for their children up to age 18.

You can save up to £9,000 into a Junior Isa in the 2023/24 tax year, which ends on Friday 5 April 2024.

There is generally no tax to pay on children’s accounts unless the child has income that exceeds the personal allowance of £12,570 in a single tax year.

Withdrawals from Junior Isas are not permitted until the child turns 18, except in cases of death or terminal illness. Upon turning 18, only the child will be able to withdraw the money.

The cash rates on Junior Isas are better than standard savings accounts. Below is a selection of the best and you can check out the best child and Junior Isa savings rates here.

Like a regular Isa, there is also a cash and shares option for the Junior version.

Most DIY investment platforms offer a Junior Isa. Look for those with low fees that suit your way of investing and offer all the support you may need.

Savings accounts for children

Savings accounts for children are essentially the same as those for adults and are offered by a handful of banks and building societies.

There are some differences, but they are mostly simple, secure cash accounts that usually pay some interest.

You can open a savings account with just £1 for any child up to 18 years old. For a children’s savings account to be in your child’s name, your child must be seven years old or older.

Generally, there is no tax to pay on children’s accounts. Like adults, children have personal income tax relief – £12,570 for the 2023/24 tax year.

If your annual income (including interest on savings) is less than this amount, you will not have to pay taxes on it.

Opening a savings account can be a good way to get children into the concept and habit of saving from an early age.