Saving makes sense
Published
From university costs and driving lessons to helping with a first home deposit, many parents want to give their children a financial head start. But with household budgets stretched, knowing how much to save can feel overwhelming.
Research from Yorkshire Building Society indicates that parents who financially support key life milestones contribute just over £28,000 on average throughout their child's early adulthood. To put that into perspective, financial advice platform Unbiased have calculated how much parents would need to save each month to build a fund worth over £28,000 by the time their child turns 18. They estimate this to be:
- £133 per month from birth (around £4.40 a day).
- £184 per month from age 5.
- £299 per month from age 10.
The figures highlight the impact of starting early. Waiting just five years increases the amount needed by more than £50 a month, while delaying until age 10 more than doubles the monthly contribution required. While many families may not be able to save the full amount, financial experts say consistent contributions, even smaller ones, can make a meaningful difference over time.
Choosing the right home for those savings is as important as deciding how much to save. Common options include:
Junior Individual Savings Accounts (Junior ISAs).
These allow parents to save or invest money tax-efficiently for their children, with funds accessible when the child turns 18.
Children's savings accounts
Suitable for parents who want a lower-risk option and easy access to regular contributions.
Investing for the long term
Parents with a longer time horizon may choose to invest rather than rely solely on cash savings. While investments can offer greater growth potential, they also carry greater risk. The best option will depend on individual circumstances, goals and attitude to risk.
Tim Grimsditch, managing director at Unbiased, comments: ‘Many parents worry they're not saving enough for their children's future, but providing support doesn't have to mean building a huge fund overnight. Starting early, saving consistently and choosing the right savings vehicle can make a significant difference over time. Parents should remember that any amount saved is better than none.’
Visit: www.unbiased.co.uk
