Parents bank on children’s savings to pay family bills

HARD-UP families have withdrawn almost £300 on average from their own children’s savings pots so far this year to meet rising outgoings, a poll has found.

Parents are pulling £8.5million a day out of children’s savings to meet higher bills as household finances are squeezed by rocketing inflation.

About 12 million parents in the UK save for their children, with an average nest egg of £3,500, according to a poll for The Sunday Telegraph from insurers Direct Line and pollsters Opinium.

But a third of those polled said they had dipped into these funds to make ends meet this year. The data suggest parents have withdrawn £1.4billion in total so far this year.

Close to a quarter of 2,000 parents questioned said they did it to cover more costly food shops, while one in four said it was for energy and council tax bills, and one in six for travel.

More than a quarter said they had reduced the amount they saved for their children or grandchildren, or stopped altogether. Families are facing the highest inflation for 40 years, an energy bills crisis and record petrol prices. Direct Line’s Vincent Guadagnino said it was “disheartening” the crisis was forcing families to eat into “savings they have worked hard to set aside for their children and grandchildren”.

Kevin Brown, of Scottish Friendly, said parents had been saving nearly 30 per cent less into the mutual’s child investment accounts.

He said: “The rising cost of living crisis is only going to get worse before things start to improve. [The poll] figures are alarming but not surprising.”

Savers across the country put away less than £6 billion in April, according to the Bank of England.

That compares to £30billion in April 2020, when the pandemic lockdown was imposed and savings levels increased as outgoings, especially on transport, plummeted.

Parents are free to withdraw money saved on behalf of their children from standard savings accounts.

But they are banned from withdrawing from Junior Isas or Child Trust Funds, which become the property of the child when they reach 18. Withdrawals can only be made in circumstances such as the death of a child.