There is a breakdown how in families are saving and investing for the future. The vast majority of the parents and grandparents want to save for their children. But many don’t.
So where is it breaking down? Why are these best intentions being stymied?
The simple fact is that while families rally together to support each other and help give the youngest members of the family the best start in life, when it comes to financially working together it’s not as easy as it should be.
The ‘bank of gran and granddad’
In many families it is the grandparents who are the cavalry, riding in to support by regularly helping with the school run, performing ad hoc babysitting duties and buying their grandchildren birthday and Christmas presents.
And yet when it comes to regularly contributing to their grandchildren’s financial future, or making ad hoc payments, or giving them money as a birthday present to help them build a little nest-egg, it is often way too difficult for them to do so.
I have personal experience: I don’t dare tell my father, but I recently found some 10-year old cheques he had written for the grandchildren but I had forgotten to pay in to their accounts as I needed to go to the bank to do so.
Last Christmas, grandparents expected to spend just under £104 on each grandchild. On average, grandparents have four grandchildren, so that’s about £416 or an estimated spend of £2.4billion in total, according to research from insurer SunLife. (source)
Grandparents want to help out, but financial services providers don’t make this easy with accounts that only accept payments from the parent, paper processes or complex AML checks. Few embrace the App age despite the fact that many grandparents are all too familiar with, for example, Facetiming or WhatsApping with their family.
It simply makes no sense to make child savings and investment accounts so hard to open, so confusing to understand and so inflexible to pay into.
There’s an App for that
Families want and need a different approach – one that suits their family set-up. Families have lots of interrelated financial needs and so effective family saving requires integrated thinking.
A survey of Beanstalk families has revealed that over a third of accounts with Junior ISAs are inviting donors – typically grandparents – to contribute. This encompasses everything from regular direct debits that are part of a grandparent’s estate planning and wealth transfer right through to ad hoc and flexible contributions such as top ups, round ups and money back on shopping via KidStart. They use the app to add personal messages to the contributions so the child can be reminded where the money came from in the future.
Over a third of Beanstalk account holders are inviting donors – typically grandparents – to contribute.
For these families, it means they can work together, harnessing their combined efforts and resources, to build a long-term nest-egg for the children in a way that works for their family structure and dynamics.
Case study: “The flexibility of Beanstalk makes a real difference and saving a real family effort”
Richard White, marketing consultant, father of Merryn aged 6 and Noah aged 3. “We’d initially opened a stocks and shares Junior ISA because our two children had inherited some money from their grandma and it was important that it was put away for their future. Where Beanstalk has made a real difference is that rather than this being a one-off payment, when their other grandparents said they wanted to start putting away some money each month for all their grandchildren, all we had to do was simply invite them from the Beanstalk app and they had all the information they needed. Now, while we continue out of habit to put some cash away each month into children’s bank savings accounts, we’re also using round-ups to also pay in a little each week for their JISA.
This simplicity and flexibility makes a real difference. And it has to be said, being able to answer the grandparents’ question “Do the kids have Junior ISAs yet?” with an immediate “Yes – and let me show you and invite you right now!” made me feel like I’d won at least one parenting point from them!
It’s not that parents don’t want to save for their kid’s future: it’s just that the products out there don’t really work for them. For too long, financial services providers have failed to update their products to reflect the realities of modern family life.
That’s why at Beanstalk, we’re doing it differently. We’re bringing over 12 years of experience and understanding of family savings to work together to build a pot of money to give their kids the best possible launch into adult life.