41% of parents don't save regularly for their children's future. Those that do save on average just £34 a month for each child which would generate an estimated pot of £10,395 for their 18th birthday.
For parents having children today, major milestones such as buying a house, which currently costs an average of £179,492, could actually cost £1,255,965 when the child reaches 30, the average age to buy property.
28% simply can't afford to save for their children and only two thirds of dads (62%) have any intention of doing so.
More than one in three (34%) parents that save would like to see their children invest this money in further education, followed by property (21%). 28% say they don't mind what they spend it on as "it's their money".
As the Government finally allows parents to exit long-standing Child Trust Funds, which were scrapped in 2011, in favour Junior ISAs, new research (1) from price comparison website money.co.uk reveals that parents planning to foot the bill for their offspring's major life milestones might need to find a whopping £259,000 (2). These milestones include learning to drive, heading off to university, getting married, and buying a first house.
However, further research reveals that 41% of parents are not saving for their children on a regular basis and, for those that are; average monthly savings reach just £34. This would generate an estimated savings pot of just £10,395 (3) by the time a child reaches their 18th birthday.
The first major financial milestone for most parents is at 17, when many teenagers learn to drive. On average each learner driver takes 47 lessons costing a total of £2,393. However, in 17 years this cost will increase to £3,351 (4), potentially over a third of the average child's savings pot.
Parents that aspire to help their children get a foot on the property ladder would need to find £1,255,965 (5) by the time their child turns 30 (6), if property prices continue to grow at their current rate. Even helping with a 10% deposit on an 'average' house would mean finding £125,596 (£17,949 in today's money).
|Milestone||Average 2015||Monthly saving||Annual saving required|
|Learning to drive at 17||£2,393.00||£11.73||£140.76|
|3 year University course at 18||£57,265.00||£265.12||£3,181.39|
|10% Deposit for a House at 30||£17,949.20||£49.86||£598.31|
|Wedding at 34||£21,000||£51.47||£617.65|
|Total amount required||£98,607.20||£378.18||£4,538.11|
|Milestones||Average at Milestone Age||Monthly saving required||Annual savings required|
|Learning to drive at 17||£3,351.00||£16.43||£197.12|
|3 year University Course at 18||£89,314.00||£413.49||£4,961.89|
|10% Deposit for a House at 30||£125,596.50||£348.88||£4,186.55|
|Wedding at 34||£41,140.00||£100.83||£1,210.00|
|Total amount required||£259,401.50||£879.63||£10,555.56|
Of those that do save for their children, over one in three (34%) would really like their children to invest this money in further education when they reach 18 and 21% in property.
Only 12% would be happy if this savings pot was to be spent on a car and just 4% condone spending the money on travel.
Unfortunately, for 28% of parents, saving for their children simply isn't an option as they feel it's a luxury they can't afford. Almost all (91%) mums who don't save for their children really wish they could, compared with just two in three dads (62%).
These parents would really like to save £1,660 a year for each child if they were able to afford it, more than four times the national average at just £410 a year.
Hannah Maundrell, Editor in Chief ofmoney.co.uk, comments:
"While most parents dream of setting their children up for life, in reality the staggering cost is far too big a stretch for most consumers. That doesn't mean saving isn't worthwhile.
"By starting early and saving often, even if it's only a little bit, parents could supercharge their child's savings so they have a cushion to launch themselves into the big wide world.
"Choosing the right account is key, and the new freedom to move Child Trust Funds into Junior ISAs gives parents the perfect excuse to check they're growing their children's nest egg is in the best place.
"For many, that will mean shunning cash savings in favour of investments for the first time. The risk may be significantly greater, over the long term so could the returns."
Notes to Editors:
Research was carried out amongst 1,832 members of the money.co.uk opinion panel from the 13 -16th March 2015. All calculations are based on consumer research and money.co.uk market analysis.
The total cost of a 10% deposit for the estimated average house price in 30 years, cost of an average wedding in 34 years, total cost of learning to drive in 17 years and cost of 3 years at university in 18 years.
Figure based on assumed interest rate of 2% AER for 18 years, with an assumed monthly saving increase of 2% per year.
Average cost of learning to drive today is based on 47 lessons (national average taken from the Driving Standards Agency) at £24 (average cost of an AA lesson), plus the average cost of insuring a car for 17 - 22 year olds (AA British Insurance Premium Index). Cost in 17 years based on an assume increase in inflation of 2% per year.
This is the estimated average house price in 30 years, based on the average house price and annual increase of 6.7% in January 2015 (Land Registry House Price Index January 2015 data).
Average age taken from LSL Property services plc's First time buyer monitor May 2013.