Ray of hope for parents if wider families save
Child Trust Fund helping to change the face of financing children’s futures
With new figures out today reporting the rising cost of raising a child to 21, The Children’s Mutual, is reassuring parents that there is a ‘ray of hope’ as the Child Trust Fund is helping families of younger children to be better placed to meet these costs. According to the leading Child Trust Fund provider, many grandparents and wider family are already helping parents to save over the long term for children’s futures and it believes that this trend will continue as families vow to meet the cost of raising children together.
David White, Chief Executive of The Children’s Mutual, said: “These headline figures may look intimidating, but when you consider that nearly a fifth of the amount being quoted is the cost of university, there is hope for parents. The Child Trust Fund was introduced to give every child a financial asset when they reached 18 and it is already changing the nation’s savings habits – providing parents with the reassurance that their child will be able to finance some of life’s bigger expenses themselves.”
According to The Children’s Mutual’s figures, families who can save £100 a month over 18 years into a Child Trust Fund, could see their child benefiting from £37,000 when they reach 18. And with every child under the age of six (and receiving Child Benefit) now entitled to a Child Trust Fund, and almost four in ten of all Child Trust Fund accounts placed by parents with The Children’s Mutual receiving regular top ups, there is a ray of hope for the future.
Mr White said: “While in these credit crunched times finding significant sums for saving may be difficult, we believe it will be far harder for families to find the same amount as a cash lump sum in the future. Currently, many parents are faced with no other option but to dip into lifetime savings or remortgage to fund university and this can seriously impact on their own financial futures. We’re urging parents of younger children to talk to wider family today, to ask if they would consider saving for the child’s future so that in 18 years’ time, they don’t miss out.” According to LV= ‘Cost of a Child’ 2009, the cost of university is £34,300 which equates to 18 per cent of the total cost of £194,000
 Future projected values are based on investing £100 a month (plus the government’s initial £250 voucher and another £250 at age 7) for 18 years in a stakeholder CTF account. We’re assuming an investment return of 7% a year, and charges of 1.5% of the CTF account value each year. The projected values aren’t guaranteed because the value of shares goes up and down. So the final payout could be more or less than this.