‘Piggybank priorities’ - 98% of 10 year-olds already saving for the future
The vast majority of 10 year-olds are more savings savvy than their parents were at the same age, with more than one in 10 already putting money aside to prepare for school, university or even buying a house.
New research from Scottish Widows of 2,000 children and adults in Britain highlights that:
98% of 10 year-olds have already started saving. Only 15% of adults say they had started saving before the age of 15.
Children take a pragmatic view of their finances. 29% say they just like to have some money saved; 27% say they save in case they need it in a few months' time; and 14% are saving for when they are older.
Over two thirds (70%) of children understand what a pension is and are already thinking about how they would like to spend their retirement.
One in 10 children already thinking about the costs of going to college, university or buying their first house and begun saving for these key milestones.
Over the past two years, children have become more aware of their parents' saving habits. 43% of 10 year olds are aware of special deals and offers when shopping.
Parents are learning from previous generations. While 48% of adults say that nobody influenced their saving habits, 77% of children say their parents encourage them to save.
To help explain why children as young as 10 are so ‘savings-savvy', Scottish Widows partnered with leading social historian Professor Jane Humphries, Professor of Economic History at Oxford University and Fellow of All Souls College Oxford. Professor Humphries has examined the generational differences in attitudes towards savings and retirement in order to shed some light on the changing priorities of young children and adults.
Professor Jane Humphries explains:
"These children started school around the start of Britain's financial crisis So perhaps growing up in an age of austerity has made them realise that saving for a rainy day is sensible. The rising costs of education may have prompted their concern with saving for university or college."
Generational Ties
Almost half (48%) of adults say that although their own saving habits were not influenced by anybody, 68% actively encourage their own children to save. Through both active encouragement and children being aware of their parents' own saving habits, children today have a greater understanding of prioritising saving for the future. Three out of four children hear their parents talk about saving money and nearly half have noticed their families trying to save money by going out to eat less.Iain McGowan, Head of Investment Propositions at Scottish Widows says:
"Whilst it may not be necessary for children to begin saving pocket money from the age of 10, this positive attitude will help the next generation manage their finances and prepare early for milestones such as securing a mortgage and even their retirement."Retirement Ready
Over two thirds (70%) of children understand what a pension is and are already thinking about how they would like to spend their retirement, including dreaming about going on lots of holidays (52%), relaxing with their family (46%), and playing with their grandchildren (36%). While children are savings savvy, they are also more optimistic about the age they will retire, with one in 10 children believing it will be before the age of 50, compared to the average retirement age of 65.
People in their 30s are the least confident that they will be financially comfortable enough to retire at 65 (70% are not confident), closely followed by 69% of people in their 40s. People in their 50s are the most optimistic about retirement, with 56% feeling confident that they will be financially comfortable to retire by the age of 65. However, with less than a decade to go until they reach retirement age, this still means that nearly half of people in their 50s do not feel financially comfortable. It is only after the age of 51 that saving for retirement becomes a top financial priority for most adults (29%). 3Financial Barriers
Neglecting to save for retirement is a common occurrence throughout the generations, with adults between the ages of 20-50+ all revealing financial barriers which prevent them from doing so. One in four people in their 20s count social activities and entertainment as a financial barrier - much more than any other age group, whilst people in their 30s are most likely to encounter costs of caring for an elderly family member as a significant financial barrier.
Other common barriers across different age groups include rent/mortgage, raising young children, student loans, spousal support and credit card debt. However, choosing not to place a priority on saving for retirement at all is not a generational difference - about 14% of all the generations surveyed say they do not place a priority on saving for my retirement at all.