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Start saving young – and benefit later

05 September 2008 / by Daniela Gieseler
Children learning to save money from an early age have a bigger chance of turning into finance-savvy adults, new research from Nationwide Building Society has found.

More than half (56 per cent) of people questioned said they had saved as a child, and 71 per cent of those still save today. The figure is significantly lower than for consumers who did not save as a child, as only 45 per cent manage to save regularly today.

Nine out of ten child-savers are convinced that forming savings habits as a child helped them to appreciate the value of money today and 80 per cent think it influenced their savings habits now, while 69 per cent of those who did not save as a child admit they do not appreciated the value of money today.

The reasons why people started saving as a child were partly to be able to afford the things they wanted to buy (53 per cent), partly because their parents asked them to do so (27 per cent). And, as a result, 84 per cent of former child savers encourage their child to save their money, or intend to do so in the future.

69 per cent of those who did not have a savings history as a child say it was primarily due to lack of money, and a further 9 per cent did not learn how to save because their parents did not save either. On a positive note, 75 per cent of those who did not save any money during their childhood say they would encourage their kids to do so.

Matthew Carter, director for savings at Nationwide, commented: “Starting the savings habit young is important and clearly influences consumers’ propensity to save in later life. Habits die hard, and this research shows that those who learnt the value of money and how to save effectively at a young age, are more likely to continue to do so in adulthood.”

He continued: “It’s heartening that so many people will encourage their children to save, even if they didn’t save as a child because, with the current economic situation getting tougher, it’s never been more important to put money aside for that rainy day.”

There is no minimum age for opening a children’s savings account, although most banks ask the parents or guardians to open and look after the savings account until the child is at least between 7 and 11 years. When the child turns 18, the account is transferred into a regular savings account.

An ISAcan be opened from 16 years, and is a great way of tax-free saving with a competitive return. Most providers offer rates over 6 per cent such as the new Post Office cash ISA with a leading rate of 6.25 per cent on a minimum investment of just £1.

Those who still have got some spare cash in the current economic climate will be able to find some good deals on high-interest savings accounts, such as the Alliance & Leicester eSaver with a current rate of 6.56 per cent for people opening a new account.

Despite the high interest rate, the account is flexible enough for consumers who may need to take out money again. Hetal Parmar, Manager for Savings at A&L;, said: “eSaver is designed like an old fashioned piggy bank – you can put money in whenever you like – but it is not for those who want to regularly dip into their savings.”

© Fair Investment Company Ltd

Written by Editorial Team