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

Seven in 10 parents are worried 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 the age of 18 are facing greater difficulty when it comes to tucking away nest eggs for the future.

Almost one third of parents with children under 18 say they are finding their financial situation difficult, compared to 22 per cent of people without children.

This is being exacerbated by the second full year of high inflation, and the cost of essentials like food and household bills outpacing income rises.

Saving for children: Seven in ten parents are worried they are not putting away enough for their children’s future 

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

Nearly one in three people are spending savings or pensions sooner than planned to keep up with household bills. 

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

Eligible parents of children as young as nine months in England are to be offered up to 30 hours of Government-funded childcare each week. 

Meanwhile, parents who get universal credit will see the maximum amount they can claim for childcare costs raised.

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

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

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

‘Retirement may seem a long way down the road but thanks to the power of compound investment growth, the earlier you start saving the more you will have when you get there.’

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

Junior Isas

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

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

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

No withdrawals are allowed from Junior Isas until the child’s 18th birthday, except in cases of death or terminal illness. Upon reaching 18, only the child can withdraw the money.

The rates on cash Junior Isas are better than standard savings accounts. A selection of the best is below and you can check all the top Junior Isa and children’s savings rates here.    

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

Most DIY investing platforms offer a Junior Isa. Look for those with low charges that suit how you will invest and offer any assistance you may need.

Savings accounts for children 

Children’s savings accounts are essentially the same as adult ones and are offered by a handful of banks and building societies. 

There are a few differences, but mostly they’re simple, safe cash accounts that usually pay some interest.

You can open a savings account with just £1 for any child aged up to 18. For a children’s savings account to be in your child’s own name, your child will have to be aged seven or above. 

There is usually no tax to pay on children’s accounts. Like adults, children have a personal allowance for income tax – £12,570 for the tax year 2023/24.

If their annual income (including savings interest) is below this amount, they won’t have to pay tax on it.

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

This post first appeared on Dailymail.co.uk