How to work out if you’re saving enough for your child’s future

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Children and young people have more financial worries predicted in the future. Will they ever afford their own home? I look back on my financial struggles and compare it to today’s young adults. Are they really that different? I didn’t have to pay university fees, but I did leave education with £3-4000 worth of debt. I was lucky enough to take part in the NHS shared ownership scheme and took advantage of the 100% mortgages on offer which meant I was a homeowner at age 25. With a buoyant housing market I then was able to sell that home and be the sole owner in my next house. If my children avoid costly university debt and work hard, I don’t see why they can’t be homeowners too. I’m not convinced university is worth it these days, they can always move out and enjoy a party lifestyle that way. I’m sure I will be eating my words when the time comes and they want to go! We have a trust fund for each of the children, which is more than I ever had, but is it enough? William was in the few who had the £250 kick start to his trust fund, I wonder what difference it will make in the end. So how do we know if we’re saving enough? Shepherds Friendly surveyed 2,000 parents and found that 43% of those surveyed said they would consider opening a savings plan for a child, 65% of those said they would only pay £10-£50 a month (that’s about what we pay per child). 35% said they would pay more than £50 a month. These are the sorts of things parents would like children to use their savings on:

  • 32.8% towards a housing deposit
  • 10.4% on their first car
  • 20.7% towards university fees
  • 36.1% on other goals

Let’s look at what the average costs of these are today.

Housing deposit

Over half of first-time home buyers put a deposit of more than 10% towards their first property and the average first-time buyer deposit is 17%. In the current mortgage market you’ll need a deposit of at least 5% of a property’s value to get a mortgage. You could then borrow 95% or less of the property’s value. The 100% mortgage days are gone I think. The average house price in the UK is £209,054, with the average house price in the UK for a first time buyer is £176,773.

Their First car

There’s the cost of a car, the average is £3,709, car insurance at around £2,232 and don’t forget driving lessons! 20 lessons at £24 each is £480.

University debt

The average based on £9,000 annual tuition fees: University debt is around £44,500. They have abolished the maintenance grants which means the poorest students leave with: £50,000+ of debt.

A wedding

The average UK wedding gives a total spend of £8,000. 1 in 10 Brits in the past five years spent between £19,000-£30,000.

A round the world ticket

If they fancy a a gap year travelling, depending on their mileage route and number of stops, £1,500-£10,000 can be spent on round the world tickets.

Are you saving enough?

Think realistically about the amount you can afford to save each month, then times that by 12 months and you’ll get your annual savings. Your annual savings then need to be times by how many years you want to save and you’ll get your total approximate savings. Then think about the shortfall if any.

Note: when you take out an investment product your capital is at risk and you may get back less than you have put in.

Take a look at the infographic for more info and pin it for later.

Are you saving enough for the future of your child? via Shepherds Friendly

Disclosure: collaborative post

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September 17, 2018
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1 Comment

  • Reply Lauretta Wright

    Crikey – it’s quite worrying seeing how much we should be saving for our kids’ future. I’ve got a direct debit for savings going into a bank account for the kids, but it’s not a lot and I need to do more – didn’t think of things like weddings if I’m honest!

    September 17, 2018 at 11:51 am
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