Santa to bring credit card debt for 14% of families
More parents and grandparents regard Christmas as cynical excuse to encourage shopping than a key Christian festival, says F&C Asset Management.
New survey research undertaken for F&C Investments by 72 Point Limited has revealed that 17 per cent of parents and grandparents expect to have to fund their Christmas spending either through clocking up borrowings on credit cards that will take more than a month to pay off or by taking out a loan.
The survey of 2,194 respondents also revealed that while 56 per cent of parents and grandparents are concerned about the financial future of their offspring and a further 21 per cent haven't even thought about it, some 62 per cent of them had yet to make any provision despite the soaring costs of a higher education. Although some 45 per cent of the parents and guardians surveyed claim they cannot afford to save for their children, almost 40 per cent of respondents say they will be spending more than £100 per child on gifts this Christmas and 70 per cent will be shelling out more than £50 per child.
"While 37 per cent of respondents regard Christmas as 'all about giving to others' and a further 31 per cent look forward to it as a 'time to get presents, eat and drink too much', for a significant proportion of families the festive season represents financial hardship," said Jason Hollands, Director, Head of Communications at F&C Investments.
"As a consequence, there is an undercurrent of cynicism towards Christmas with 16.5 per cent of those surveyed dismissing it as little more than 'an excuse by companies to get us to buy things', a response which tellingly outstrips the mere 14.7 per cent who recognise Christmas as 'an important Christian festival."
"Of course it is understandable that families will want to make Christmas a special time for their kids and the pressures to buy them the latest 'must-have' toys are significant. However, there is also case for spending a little less on gifts which may have a limited shelf-life and instead to direct some of these monies into savings schemes that will help their kids have a better start to their adult lives," said Hollands.
"Surprisingly, given the mounting costs of college and getting a foot on the property ladder," added Hollands, "even among those who have started saving for their offspring only a minority of 43% wish they had started to do so earlier."
According to the research, cash accounts remain the most likely choice among those surveyed as a potential home for any children's savings with some 64 per cent stating that they were likely to choose a bank or building society account as a place to invest for their children.
Even within the Government's flagship saving scheme – the Child Trust Fund – 74 per cent of respondents believed that it would be better to invest in a cash account as 'the safest option' compared to 26 per cent who agreed with the statement that 'it is best to invest the Child Trust Fund in a stock market fund as this will generate the best returns'.
"The survey shows that there is a huge amount of work to be done to both increase awareness of the need to save more - and earlier - for children and also to better educate families on the basics of investment. While cash accounts are undeniably low risk, stock market based choices such as investment trusts have the potential to generate much higher returns over long periods of time, especially in an 18-year scheme such as the Child Trust Fund."
"F&C believes that the Government should consider building on the foundations of the CTF by extending access to these accounts to all children under the age of 18, not just new born children, so that those parents or relatives willing to fund an investment for their offspring are able to do so in a tax efficient manner."
New survey research undertaken for F&C Investments by 72 Point Limited has revealed that 17 per cent of parents and grandparents expect to have to fund their Christmas spending either through clocking up borrowings on credit cards that will take more than a month to pay off or by taking out a loan.
The survey of 2,194 respondents also revealed that while 56 per cent of parents and grandparents are concerned about the financial future of their offspring and a further 21 per cent haven't even thought about it, some 62 per cent of them had yet to make any provision despite the soaring costs of a higher education. Although some 45 per cent of the parents and guardians surveyed claim they cannot afford to save for their children, almost 40 per cent of respondents say they will be spending more than £100 per child on gifts this Christmas and 70 per cent will be shelling out more than £50 per child.
"While 37 per cent of respondents regard Christmas as 'all about giving to others' and a further 31 per cent look forward to it as a 'time to get presents, eat and drink too much', for a significant proportion of families the festive season represents financial hardship," said Jason Hollands, Director, Head of Communications at F&C Investments.
"As a consequence, there is an undercurrent of cynicism towards Christmas with 16.5 per cent of those surveyed dismissing it as little more than 'an excuse by companies to get us to buy things', a response which tellingly outstrips the mere 14.7 per cent who recognise Christmas as 'an important Christian festival."
"Of course it is understandable that families will want to make Christmas a special time for their kids and the pressures to buy them the latest 'must-have' toys are significant. However, there is also case for spending a little less on gifts which may have a limited shelf-life and instead to direct some of these monies into savings schemes that will help their kids have a better start to their adult lives," said Hollands.
"Surprisingly, given the mounting costs of college and getting a foot on the property ladder," added Hollands, "even among those who have started saving for their offspring only a minority of 43% wish they had started to do so earlier."
According to the research, cash accounts remain the most likely choice among those surveyed as a potential home for any children's savings with some 64 per cent stating that they were likely to choose a bank or building society account as a place to invest for their children.
Even within the Government's flagship saving scheme – the Child Trust Fund – 74 per cent of respondents believed that it would be better to invest in a cash account as 'the safest option' compared to 26 per cent who agreed with the statement that 'it is best to invest the Child Trust Fund in a stock market fund as this will generate the best returns'.
"The survey shows that there is a huge amount of work to be done to both increase awareness of the need to save more - and earlier - for children and also to better educate families on the basics of investment. While cash accounts are undeniably low risk, stock market based choices such as investment trusts have the potential to generate much higher returns over long periods of time, especially in an 18-year scheme such as the Child Trust Fund."
"F&C believes that the Government should consider building on the foundations of the CTF by extending access to these accounts to all children under the age of 18, not just new born children, so that those parents or relatives willing to fund an investment for their offspring are able to do so in a tax efficient manner."
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