Give credit to your teenagers – it’s likely they’ll turn it down

Britain’s teenagers are far more responsible with money than parents think, according to The Children’s Mutual. While many parents say their offspring would blow a lump sum on turning 18, the youngsters are actually more likely to save than to spend, spend, spend.

According to research by The Children’s Mutual to coincide with the third anniversary of the Child Trust Fund (CTF), youngsters given £20,000 at 18 are most likely to save it (57 per cent), with spending on education or putting it towards their first house their second and third choices.

In The Trust Fund Generation report, the Social Issues Research Centre (SIRC) asked parents to predict what their children would do with the cash lump sum. They said their children would waste it on material goods (42 per cent) and splash the cash ‘just having fun’ (19 per cent).

David White, Chief Executive of The Children’s Mutual, said: “The Child Trust Fund was launched to give every youngster in the UK a financial springboard into adulthood and to change the nation’s savings habits.

“You’ve got to give credit to our teenagers! Their parents were brought up in an environment that was all about borrowing and spending but this generation of young people has realised that saving now and spending later is a better approach. With the papers full of the credit crunch there has never been a more appropriate moment to talk about this.

“We think this is good news for parents. They can save into Child Trust Funds with the knowledge that the money is going to make a real difference. The Child Trust Fund was introduced to help give young people choice and if today’s teens are anything to go by, it could revolutionise the UK’s saving culture. Tomorrow’s 18-year-olds will also benefit from the financial education that goes hand-in-hand with growing up owning a Child Trust Fund account, altogether delivering a very promising future indeed.”
The Child Trust Fund, or CTF, was launched on 6 April 2005 and every child born since 1 September 2002 is eligible for the scheme. According to The Children’s Mutual, the UK’s first universal saving scheme is already delivering dramatic results.

CTF Facts – Three Years On

Nearly a third of children in the UK are now eligible for a CTF account;

3.43 million CTF vouchers have now been issued;

Families are embracing the scheme from the child’s birth – in 2007, over half of all new CTF accounts actively opened with The Children’s Mutual had a monthly direct debit set up from inception;

The average monthly amount being saved by direct debit with The Children’s Mutual is nearly £24 – if this contribution remains unchanged until the child reaches 18, they could receive a lump sum of £9,750;

If topped up to the maximum level of £100 a month, a CTF account could deliver more than £37,100 at 18;

According to The Trust Fund Generation report, if saving continues at current levels, CTF accounts could pay out an estimated £2.4 billion a year from 2020

Mr White said: “The Government introduced the CTF to tackle child poverty, break the cycle of disadvantage and open savings and wealth ownership to all. It is now three years since the scheme went live and already one in five of the lowest income families that proactively open CTF accounts with us are finding the money to save into their child’s account on a monthly basis. By saving a little, regularly, families could be helping their children onto the first step of the property ladder, to start their own business or to leave university debt free.”

According to The Children’s Mutual, if the Child Trust Fund had been introduced in 1990 today’s 18-year-olds could be receiving significant lump sums for the future.