|
Parents too poor to save for children Original Source Link: (May no longer be active)
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2003/10/24/nsave24.xml&sSheet=/portal/2003/10/24/ixportal.htmlhttp://www.telegraph.co.uk/news/main.jhtml?xml=/news/2003/10/24/nsave24.xml&sSheet=/portal/2003/10/24/ixportal.html
Parents are too poor to save for children
(Filed: 24/10/2003)
Four million say they cannot afford to provide nest eggs, reports Sarah Womack
A third of parents are so short of money they cannot afford to save for their children's future.
Although parents agree that squirrelling away tiny sums does wonders for long-term finances, four million mothers and fathers are simply too stretched to provide any kind of nest egg for their offspring.
One in four saves only rarely or when they can afford it, while half of parents with three or more children say putting money aside is a pipedream.
Yet the increasing cost of private and higher education means that families risk serious financial problems in the years ahead, according to a report today.
The problem is even more explosive among divorced people living within a stepfamily. With one in three marriages ending in divorce, there are around 650,000 stepfamilies in Britain.
"Setting up an alternative household and paying maintenance and school fees causes an enormous jump in outgoings and it is hugely difficult," said a spokesman for the National Stepfamily Association.
Among families which do invest for their children, saving for university is the most common reason, according to Mintel, the consumer analyst, which commissioned the report based on a survey of 2,000 people.
The cost of a three-year university course, with living expenses and tuition fees, is around £22,500, although this will rise if top-up fees are given the go-ahead. A student's average debt on graduating is £12,000.
The anger parents feel about the cost of education was demonstrated this week when Charles Clarke, the Education Secretary, was confronted by a mother who said her son expected to graduate with debts of between £15,000-£20,000 and had to eat baked beans on stale bread to survive financially.
Other parents pay for internet supermarket deliveries to their children at college to help to reduce food bills.
Other major reasons given by parents for saving were to pay for a deposit for their child's first home (17 per cent), school fees (13 per cent), their wedding (nine per cent), or to fund a gap year (nine per cent).
Sarah Hitchcock, a financial analyst, said the more children a family had, the less likely the parents were to save for their children's future.
This compares with just one in three (31 per cent) of parents with one child who did not save, and 33 per cent for those with two. The reluctance to save, together with the trend to delay having children, had "worrying implications" for the financial security of the whole family, she said.
"These parents are going to struggle to help pay for further education, especially because it will coincide with the time they themselves reach retirement age.
"Rising university costs as well as increased self-reliance for retirement provision means parents should not only be preparing for the children's futures but should be doing so as early as possible."
The Government will announce the final details shortly of its new Child Trust Fund, intended to boost the children's savings market. The fund will provide every child born with an initial endowment of £250, rising to £500 for children from low-income families.
|
|
