Many parents don't trust kids to keep hold of savings, poll shows

Parents are underselling their children's potential to sensibly spend the money generated from a Junior Isa when the money is given to them upon reaching adulthood.

Only 16 per cent of parents believe their children will save most of the money from a Junior Isa, a survey carried out by the Post Office has shown, while a much higher proportion of children 52 per cent said they wouldn't spend the money.

Forty-six per cent of children declared they would invest a lump sum into their education and 42 per cent said they would invest it into a car or a house.

On the less prudent end of the spectrum, 26 per cent said they would spend it on having fun and 19 per cent said they would use it to go on holiday.

It is a matter of trust for parents as to whether they believe their child would have the desire and the willpower to spend the money wisely. Particularly as it would likely be the most amount of money they will have had at any given point in their life.

Richard Norman, the director of savings and investment at the Post Office, said: "The news is full of stories about the economy, and families are tightening their belts at home too. Evidently, this hasn't escaped the attention of the younger generation and many are taking notice of what's going on in the financial world."

"Rising financial awareness in a recessionary environment will hopefully ensure the younger generations grow to be financially savvy adults."

This is important research for those parents considering taking out junior Isas for their children as the Isa deadline of April 5th looms nearer.

As consumers enter peak Isa season, banks will be competing to offer the most competitive rates to lure in potential customers looking to make tax-free savings.

"If parents want a tax efficient way of saving for their children, then Junior Isas are a great way to save towards a child's future. Of course not everyone can afford to invest the full amount, but every little helps," Mr Norman said.

Research carried out by J.P. Morgan Asset Management revealed that although 96 per cent of parents are concerned with the financial security of their children's future, only a third were interested in taking out a Junior Isa.

If you're trying to save for the future contact Moneyextra. We offer a range of services that will help you find the best savings rates for you.

Moneyextra.com recommends you take independent financial advice before acting on any article

Back

2012-02-22 13:12:25 © Moneyextra.com