As a new generation heads to university, new research from Columbia Threadneedle Investments reveals education has fallen down parents’ financial priority lists over the past decade, as they increasingly prepare to support their children with the costs of adult life.
Just 52% of parents are confident their children will have a secure financial future, according to Columbia Threadneedle Investments’ long-running Investor Confidence Tracker. More than a quarter of parents (28%) say helping their children with a property purchase or deposit is their number one saving or investment priority for their children’s future. Only 16% put education first.
The difference has widened substantially over the past decade. In 2016, property and education were almost level, at 24% and 23% respectively.
A further 14% of parents now prioritise helping with their children’s future living costs, up from 10% in 2016. Taken together, 42% of parents prioritise property purchase / deposit or the future cost of living.
Property climbs the priority list
The focus on housing is particularly pronounced among older parents. Among those aged 55 and over, one in four (25%) say helping their children with a property purchase or deposit is their top priority when it comes to saving or investing for their child’s future. Only 7% prioritise education.
Higher earners were particularly likely to focus on housing. Almost four in ten (38%) parents with household incomes of at least £100,000 say property is their main priority for their children, compared with 25% who prioritise education.
However, the gap between property and education is even more pronounced among lower-income households. Among households earning less than £50,000, 24% prioritise helping their children with property and 16% prioritise their future cost of living, compared with just 8% who say education is their main priority.
Financial education remains a priority
While the financial milestones parents are preparing for have changed, the importance placed on teaching children about money has remained remarkably consistent. Two thirds (66%) of UK adults believe children should begin learning how to manage money by the age of 12, compared with 63% when Columbia Threadneedle first asked the question in 2014. More than nine in ten (91%) believe children should start learning about managing money by the age of 14.
Ross Duncton, Head of Direct at Columbia Threadneedle Investments, said: “The financial challenges facing everyone, including young people, have changed considerably over the past decade, and parents’ priorities are changing with them. While education remains important for all, helping children get onto the property ladder and manage the wider costs of adult life is increasingly front of mind.”
“For parents who are able to put money aside, starting early can make a meaningful difference. Investing over the long term gives savings more time to potentially grow and can help families build towards the significant costs their children may face as they become financially independent.”
“A Junior ISA can provide a tax-efficient way to invest for a child’s future, whether that ultimately helps towards a first home, education or another major milestone. Just as important is talking to children about money from an early age, as this can help them develop the confidence to manage those savings when the time comes.”
