Parents' Savings Habits: A Study on Savings for Children and Rainy Days

Parents are prioritizing their children's financial futures, with UK parents saving an average of £4,001 for each child, according to a study by Smart Money People and Be Clever With Your Cash. This amount is significantly lower than the £6,251 saved for themselves, with nearly half (47%) of parents using their savings as a rainy day or emergency fund. Mums are more likely to set up an account for their child, with considerations including customer service, accessibility, and savings rates.

Key Takeaways:

• UK parents have saved an average of £4,001 for each child, while saving £6,251 for themselves, with 47% using their savings as a rainy day fund.
• Mums are more likely to set up an account for their child, with considerations including customer service, accessibility, and savings rates.
• Parents put away approximately £750 per year for their children's savings.
• Some children's savings accounts may require a parent or legal guardian to open the account, while others may allow relatives to open the account.
• Junior ISAs are a type of long-term tax-free savings account for children, with a savings limit of £9,000 in the 2024/25 tax year.
• Parents adding funds to their child's account may be taxed on the interest earned, with HMRC requiring notification if the child receives over £100 in interest per tax year.

Statistics:

• Average savings for each child: £4,001 (Smart Money People and Be Clever With Your Cash)
• Average savings for parents: £6,251 (Smart Money People and Be Clever With Your Cash)
• Amount saved per year for children: £750 (Smart Money People and Be Clever With Your Cash)
• Savings limit for Junior ISAs: £9,000 (2024/25 tax year, HMRC)
• Interest earning threshold for tax payment: £100 (HMRC)

Sources:

• Smart Money People and Be Clever With Your Cash
• gov.uk (HMRC)
• Nationwide Building Society
• Webb, with the suggestions on tips for finding the best savings deal.
• Jacqueline Dewey, CEO, Smart Money People