In the Family Investments report, 39 per cent of parents said that they did not understand or were unsure of the difference between child trust funds (CTFs), which could cost them and their offspring dearly.
“Parents see cash as a safe, understandable option, but do they really know what they’re getting?” said the friendly society.
It goes on to demonstrate the need for proper debt advice due to the lack of knowledge as to the effect of inflation on CTFs.
The report also shows the need for people to take independent debt advice as a third of parents said that they were confused by the information that banks and building societies gave them.
“A lack of guidance may then be the reason why so many are reverting to what they believe they know and opting for a cash CTF, which is similar to an average savings account,” added the report, revealing how a lack of financial knowledge can be costly.