When economic times get tough families are usually expected to have some level of savings to fall back on. But research undertaken by Abbey Savings suggests otherwise.
Over a quarter of parents have no savings and investments, raising concerns over whether British families are able to afford the costs of raising their children.
Another 36 per cent of parents surveyed rely on their own savings to pay for basic living costs.
A further 20 per cent have fewer than £1,000 to cover their expenses in times of difficulty.
”It’s vital for everyone to have a rainy day fund and it is even more so for parents, who must juggle the need to build up a nest egg for their children’s future with the need to provide for the here and now,” said Reza Attar-Zadeh, director of savings and investments at Abbey Savings.
The report also revealed that a quarter of these parents have reduced their savings by £3,000 a year, with some using existing savings to support their daily costs.
The report comes at a time when parents are not only facing a bleak economic climate, but rising childcare costs.
Since December 2007, these costs have risen by 6.5 per cent. Childcare for children between six months and 14 years of age can cost up to £53,818. For two working parents in a typical UK household, that’s £332 a month in fees.
And then there are university costs to consider. The price tag attached to a child’s entire education - including secondary school, university tuition, rent, travel and living costs - could reach up to £50,240, according to the research.
“It is concerning that many families are saving less, as this could leave them facing financial difficulty in the future,” Mr Attar-Zadeh said.
However, with rising unemployment and low interest rates, there are fewer incentives to save.
But Andrew Hagger of Moneynet.co.uk said “putting a little cash aside each month, rather than continually reaching for the plastic is a habit that UK households need to rediscover.”
“Unless you make a determined effort to start saving, it’s one of those things that’s easy to put off and never get round to doing anything about,” he said.
Mr Hagger also recommended using a regular saver account because it offers people a chance to build discipline by saving every month during the course of the year. Savers are also rewarded with a worthwhile interest rate.
But the poll also produced some positive data.
Almost a third of parents plan on saving more each month in the future. However, whether they follow through on this will also depend on economic conditions and the job market.
“It’s encouraging to see that some families are looking ahead and planning to save more - we hope this trend will continue,” Mr Attar-Zadeh added.
