Parents use savings for children to avoid debt

Individuals who have been putting money away for their children’s future are dipping into it because they do not have enough cash.

Research carried out by MyVoucherCodes.co.uk found 46 per cent of those questioned had some sort of fund for their kids. However, 34 per cent of them admitted to taking money out of it.

Some ten per cent of those who did this said it was a regular occurrence as they try to stave off debt worries and stay in the black.

A total of eight per cent of those who had not started an account for their children observed they had tried but could not keep the cash in as they had to use it for other purposes.

While a further 21 per cent said they simply could not afford to set one up, which could mean they are already struggling with debts.

Kate Moore, head of savings and investments at Family Investments, observed with household finances “so tight” many will not have enough income to spread around and so some areas will be neglected.

“Families may find it harder to save for their children in the future due to a combination of factors,” she added.

The specialist added the situation could get worse, which may see debt consolidation help required, after the government announced child benefits are to be scrapped for middle earners.

Ms Moore stated with Child Trust Funds being scrapped in January 2011, there will be no “accessible and easy to use” product for parents who decide they want to try and store cash for their children.

Posted by Amy White