So who really pays more into children’s savings accounts – parents or grandparents?

Many of today’s children will struggle to get a mortgage or clear themselves of university debt. So how much money are parents and grandparents really putting away for them? And how do you compare?

We recently asked hundreds of parents and grandparents whether they put money into children’s savings accounts for their children and grandchildren in the past year. Many of the answers surprised us – and we spotted some worrying trends.

Parents are beating grandparents – but many are saving less than they were in the past

The big news is that a higher proportion of parents are saving for their kids rather than the grandparents – that’s 66% of parents versus 44% of grandparents. And although 30% of parents managed to save more than £300 in the past year, only 11% of grandparents matched that. 

These results may not be entirely surprising – after all, parents are directly responsible for their children. But more concerning is the fact that over a third of parents saved less in the past year than they used to for their children. Given the fact that the economy has been performing better and wages are improving, that’s an unwelcome surprise. On the other hand, grandparents are maintaining their levels of saving, with nearly 70% saving the same as before. 

But parents do seem to realise they could and perhaps should be saving more, because 36% of them are planning to do so in the next year. This is in line with what we would expect as the economy picks up. But it’s surprising to discover that less than one in five grandparents (19%) are planning to save more for their grandchildren in the year ahead than they did last year. 

Here are the key figures:

66% are saving for their children 
35% saved less last year, while only 21% saved more than before
36% are planning to save more 

44% are saving for their grandchildren 
21.5% saved less last year, while 9.1% saved more than before
16.9% are planning to save more 

Many people are still putting nothing at all into children’s savings

One fact comes through loud and clear: a whopping third of all parents (34%) and more than half of all grandparents put aside nothing at all for their children or grandchildren. And of all those who do save, including both parents and grandparents, the vast majority are planning to save the same or less next year. 

In the years since the financial crash older people have been squeezed less than people of working age. Many older people on defined benefit pension schemes may even be better off than they were. So it’s surprising that 56% of grandparents are still saving nothing at all for their grandchildren. 

All these parents and grandparents who are putting aside nothing could be storing up trouble for the future. For young people facing university fees and the challenge of getting on the housing ladder, a lump sum could make all the difference. 

Parents are saving for children more regularly than grandparents

Parents are more than twice as likely to save regularly than grandparents. This may be because grandparents consider saving for grandchildren a gift rather than a regular habit – something that happens on an ad hoc basis at birthdays and Christmas. 

Despite this, parents are also putting aside larger sums than grandparents. Four times more parents than grandparents saved over £1000 in the last year (9.6% of parents vs 2.4% of grandparents). 

What people are saving for

Parents and grandparents do agree on what they are saving for, with university topping the list, followed by driving lessons, and buying a home third. And whereas paying for a wedding would once have been a major concern, today it comes a distant fifth, with only 7% of grandparents and 9% of parents putting aside money for it. 

How child savings vary across the country

Parents and grandparents in the wealthiest part of the country, London and the South-East, save most. 

In contrast, parents in the East Midlands are least likely of any region to save. 53% saved nothing for their children in the past year compared with the national average of 34%. 

The overall picture

Our research shows that across the country the majority of parents and nearly half of grandparents are not only thinking ahead but doing something about it too. The flip side is that more than half of grandparents and over a third of parents are not putting any money at all into a child savings account. 

More on this…. If you’re currently not saving anything for your children or grandchildren – or you are saving but getting very low interest – take a look at our Robin Hood Young Savers account. With an impressive 3% gross p.a./AER* (Fixed ** until 31 July 2017), it gives kids a brilliant return on their money. 

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*We will pay your interest with tax taken off at the lower rate of 20% (net interest). If you do not pay tax and have filled in an HM Revenue & Customs R85, we will not take tax off your interest (gross interest). Your tax treatment will depend on your individual circumstances and may be subject to change in the future. AER stands for Annual Equivalent Rate. It shows what the interest rate would be if the interest was re-invested in the account each year. The AER assumes an account opening date of 01 October 2015.

**There’s no guarantee that the current difference between our fixed rates and general rates will continue. General interest rates may fall below or rise above the fixed rate.
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