A new research piece has today revealed that parents are failing to prepare for the cost of their children’s future living. The research, commissioned by financial services provider Teachers Assurance, found that just 38% of parents are saving on behalf of their children and that in the majority of cases, parents are largely unprepared for the later costs of life their children will experience. This includes university fees, a deposit on a first home, their first car and even trips around the world.
Through surveying over 2,000 UK adults throughout May 2014, Teachers Assurance found that while parents are largely in tune with the cost of future living, they have not planned to contribute towards these expenses, meaning uncertain financial futures for their children. Though 57% of parents do save for their children in their child’s name, the most common contribution is between £1 and £100 annually, meaning a total pot of less than £2,000 by the child’s 18th birthday.
Costs of future living
While 65% of parents believe that university fees alone would cost their child over £5,000, 33% stated they have no intention of contributing to these expenses. With the average cost of university fees ever mounting and currently standing at £10,133 per year over an average three year duration, children could be looking at significant debts even before living or other associated costs are considered.
When it comes to purchasing a first home, the financial outcomes are just as tough for children. 76% of those parents surveyed believe a deposit will cost their child over £5,000, yet 38% of parents aren’t planning to contribute to this expense. Currently the average first home deposit is £29,400 and rising each year with the cost of housing. This bleak outcome means children will need to start saving early themselves if they hope to get on the property ladder.
When it comes to travelling the world, children are even less likely to receive a financial gift from their parents, as 55% said they won’t contribute to these expenses.
Financial strain affecting parents
Though many parents expressed that they would like to be able to contribute more financially towards their children’s futures, 65% of those who aren’t saving are simply unable to due to tightening household budgets and other financial strains. Some parents (30%) also feel there is no purpose tucking money away now as they don’t believe it will be worth a relative amount in the future. A final 16% feel that setting up a plan for their children is too complex.
To find out more about saving or investing for your child in order to provide for their future, visit www.teachersassurance.co.uk.