Making savings for your children work

Many parents are keen to give their children a flying start financially by putting aside money throughout their childhood. Mums have been shown to be more likely to take the lead in this area, with most savings being held in cash products, such as cash Junior Individual Savings Accounts (JISAs) or premium bonds.

Mum’s the word

The research1 shows that 60% of those actively contributing to a child’s savings and investments were women. Researchers commented that this appears to fit in with a broader theme whereby women tend to connect investing to outcomes for their family more than to their own needs.

The survey also highlighted a drop-off in contributions as children get older. While 67% of new parents start saving or investing for their new-borns, this figure falls to 54% by the time children reach secondary-school age.

Is cash king?

The efforts of parents to save for their children is clearly admirable, but it is important to make sure that the money works hard for the long term. The JISA recently celebrated its tenth birthday, and the allowance has increased over the years from £3,600 a year in April 2011 to £9,000 a year today – currently stocks and shares JISAs make up just 3% of all accounts.

In times of rising inflation, sticking to cash can limit the impact of parents’ savings, as the real value of cash will be eroded over time. While not guaranteed, investment products have historically delivered better returns over the long term. It’s advisable to consider the options.

1Boring Money, 2021

The value of investments and income from them may go down. You may not get back the original amount invested.