Majority of UK, US Millennial Parents Saving for Kids’ Education

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Almost two-thirds of UK parents surveyed by the British Bankers’ Association (BBA) put money in an account for their children, and around half of the parents who were saving for their kids started the nest egg when their first babies were born, reports The Scotsman.

And 33% of parents said that their children’s grandparents add to the savings. Also, 63% of women said they had started a savings account for their children, and 62% of men said the same. Children’s savings accounts, such as Child Trust Fund and Junior Isas, were often used for savings while one in 25 parents said they were keeping their children’s savings at home.

In Scotland, 75% of parents are putting aside money for their kids compared to 53% in the Southwest of England and the East Midlands and 61% in London. Wales has 64% of parents putting money away for their children.

The two most popular reasons for having savings were to help their children prepare for the housing market and paying higher education fees, with 21% of parents who were saving for both.

Twelve percent of parents said they were putting money aside to assist their children in purchasing their first vehicle, and 6% were building a nest egg towards school fees.

Anthony Browne, chief executive of the BBA, said:

“Savers have been hard-pressed in recent years due to low interest rates.”

But he continued by saying that interest rates may begin to rise in the coming year, according to the Bank of England.

Over 500 parents who had children aged 18-years-old and younger participated in the survey.

In the US, 74% of parents from 30 to 34 have started putting money aside for college. A new poll found that Millennial parents are significantly more likely than the generation before them to save for their children’s higher education, and a larger number want to be able to pay everything for their children’s college education.

Parents may not be able to to do this, however, based on the comparatively small amounts most have been able to stow away so far, writes Liz Weston for Reuters.

Seventy-four percent of parents aged 30 to 34 who were surveyed for the 2015 Fidelity Investments College Savings Indicator had begun to put money aside for their children compared to 58% of parents the same age polled in 2007.

The fallout from the financial crisis affected Millennials for much, if not all, of their adulthood, says Keith Bernhardt, vice president of retirement and college products at Fidelity. For that reason, most are more careful about accruing debt and are set to assist their kids in avoiding the dreaded student loan dilemma.

Currently, thirty-somethings have saved a median $1,500 for their progeny compared to a $1,000 median amount for the same-aged parents in 2007.

The research was completed by interviewing 2,740 parents with children aged 18 and younger with annual incomes of over $30,000 annually or more. Of parents surveyed who were born between 1981 and 1997, 85% attended college and 61% had college degrees.

A concern for parents was that helping their children with college might affect their kid’s chances of getting financial aid, but Fidelity said incomes are a bigger factor in financial aid formulas than are assets.