Saving for your child is a great way to set them up for the future. It enables them to start adulthood with a pot of money they can use as a financial safety net, should unexpected expenses arise. It can also help them pay for university, put down a deposit for a house or put money towards a big life event. Saving money for your children can also help encourage them to set up their own savings goals and improve their financial education. The latest CBI Economics analysis reveals that adults who received financial education during childhood save 43% more into their pensions each month than those who didn't.
Read on to learn more about why you may want to consider saving for your kids.
Common reasons people save for their children
There are many reasons to put aside money for your children. Maybe you want to build up savings for them to use when they’re older, or you're thinking of saving for something more specific. Here are some of the common reasons why parents choose to save for their kids.
According to RAC, it can cost anywhere in the region of £1,384 to learn to drive. That's taking into account that driving lessons with a qualified instructor cost around £25 to £30 per hour, and the average person requires 45 hours of driving lessons and 22 hours of practice before taking their test.
Once they've passed their driving test, your child might need help buying their first car, which can cost around £3,562. On top of the car's purchase price, there's also car insurance, an MOT and car tax to pay, bringing the average total cost of your child's first car to around £5,945.85 —that's not including breakdown cover, petrol or servicing.
University is often one of the biggest reasons parents start saving for their children. The cost of going to university has soared in recent years, and tuition fees alone cost £9,250 in England, Wales and Northern Ireland. With rent, food, travel and other expenses on top, your child may have to pay up to £22,200 a year.
Getting on the property ladder is increasingly difficult for young people, so putting money aside for a deposit is a great way to help your kids afford to buy their first home down the line. Deposits are typically between 5-20% of the property price, with the average first-time buyer putting down 15%. With the average house price in the UK at £274,000 in January 2022, a 5% deposit will mean your child must stump up £13,700, or £41,100 with a 15% deposit.
Many parents are keen to help their children have the wedding of their dreams when the time comes. Having savings for your child set aside to help them pay for their wedding will likely be a huge help, given that in 2021, the average wedding cost around £17,300. Having some money already saved makes a fantastic wedding present and can help take some of the stress out of planning their special day.
When to start saving for your child
It's never too early to start saving for your child's future. The sooner you start, the more you'll be able to save. If you can, it's a good idea to start saving money for your children as soon as they are born. As your child grows up with a savings plan, they can see how a small amount of money can grow, encouraging them to get into healthy financial habits.
Start investing for your child with GoHenry and apply for Junior ISA
If you're thinking of investing money for your child, a GoHenry Junior ISA is an easy, tax-efficient way that may help build up a nest egg for your kids. Get started with our Stocks and Shares Junior ISA with just £1 through your GoHenry parent app. You can contribute up to £9,000 each tax year, and keep an eye on your growing balance in the GoHenry app.
For informational purposes only.
The information provided is not intended to be investment, tax or legal advice - nor does it claim to be comprehensive. Speak to a professional, if you're unsure about whether investing is right for you. We do not endorse any third parties referenced.
Tax treatment depends on your individual circumstances and may be subject to change.
Junior ISA rules and T&Cs apply. Investment services provided by gohenry Family Finance Limited, an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority: (FRN: 574048).