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Abbey Savings reveals 28% of parents fail to save for 'rainy day'

11 November 2009 / by Andy Davies

More than a quarter of parents with young children do not have any money saved for a 'rainy day' or for their child's future, Abbey Savings has revealed.

In addition, Abbey has found that 20 per cent of parents with young children have less than £1,000 in savings to fall back on in times of financial hardship.

Further research by Abbey has highlighted that childcare costs have risen by 6.5 per cent December 2007, which as a result has led to a quarter of parents with children of primary school age, reducing the amount they save by as much as £3,300 a year in a bid to cope with the higher costs.

Concerned by these findings, Abbey is now urging parents with young families to make efforts to save.

Reza Attar-Zadeh, director of savings and investments at Abbey, said: "It's vital for everyone to have a rainy day fund 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."

Commenting on Abbey's research, Andrew Hagger, spokesman for Moneynet.co.uk says it is "no surprise that parents are savings less" following increasing unemployment and interest rates falling in the past 12 months.

Mr Hagger warned people who may consider putting off saving to think again, saying that an unexpected expense could lead people to use their overdraft or credit card and pay interest charges that they "can ill afford".

"The worrying thing is that if people are not able to save, how will they cope when mortgage rates rise from their current low levels and they are forced to find an extra chunk of money each month – it's a potential recipe for disaster," he said.

Encouragingly, Abbey has found that nearly a third of parents now intend to start saving more each month in case of a 'rainy day'.

However, a solution for people who have struggled to get into the savings habit, according to Mr Hagger, is opening a regular saver account.

He explained: "A regular saver account is the ideal starter account for savers because it gives you the discipline to save something every month for 12 months and sees you rewarded with a worthwhile rate of interest."

© Fair Investment Company Ltd