26 Dec 2013 09:25 GMT
*Parents could build up £11k nest egg by saving on Christmas spending. Children have not been shy in making clear their Christmas wishlists this year, with almost three quarters of parents (74 per cent) knowing exactly what their children want as their top present, according to new research from Lloyds Bank[i]. These children also look set to have their Christmas wishes answered, with four in five parents who know what their child wants (80%) saying they will buy their child their top present. Just under one in 10 (9%) have said they wouldn’t, with a further five percent saying they will look to buy a cheaper alternative.
The research also found that parents will spend an average of £180.38 on each of their children at Christmas this year, with £105.29 spent on their main present, and an average of £75.09 on additional presents. One fifth of parents (20%) will spend on average £25-£49.99 on their child’s main Christmas present. Top treats this year include iPads and tablets (10%), games console games (10%), and games consoles (8%).
Children in Scotland look set to be the biggest benefactors, with parents in the region splashing out an average of £124.49 on their youngsters’ main Christmas present. This is considerably more than the £78.44 that London-based parents are willing to pay out.
However, parents could save up to £3,600 (£3,628) over 16 years if they invested the money spent on presents in savings accounts instead. Indeed Lloyds Bank research shows 80 per cent of parents with children aged 16 and under already have a savings account in place for their child which would make this an easy Christmas gift.
If this money were to be placed in the Lloyds Bank Young Saver account for each year over a 16 year period, parents could see this nest egg for their child grow to £3,628, having earned over £748 in interest alone[ii].
Saving on the household Christmas budget also adds up
Although not all family spending over Christmas will be on the children’s presents, households looking to save rather than spend over Christmas could also see considerable returns. Lloyds Bank estimates that the average household spend on Christmas is almost £550 (£544).
Investing this money in the same Lloyds Bank savings account annually over 16 years, would achieve a savings pot of almost £11,000 (£10,965), of which over £2,200 (£2,261) would be interest earned. Similarly, saving just a third of this total each year over 16 years adds up to over £3,000 (£3,648) and more than £750 (£752) in interest.
Greg Coughlan, Head of Savings at Lloyds Bank, said: “Whilst we appreciate that most parents would not choose to forgo spending on their children’s Christmas presents, this research demonstrates how setting just some of the Christmas budget aside could add up over the long term. Whatever the spend, Christmas is an expensive time and saving a little and often throughout the year will help to pay off those yuletide bills.
“With household budgets stretched as we go into this festive period, it is more important than ever to ensure that any savings that can be made are put to the best use. Starting a nest egg for your child’s future could be one Christmas present they are truly grateful for in the years to come.”
Household expenditure on Christmas
Calculated by using ONS data on the average household expenditure on goods that are typically bought for Christmas and uplifted using retail sales data to reflect the extra expenditure that takes place in December.
All figures have been expressed in nominal terms.
Lloyds Bank Young Savers account feature:
• Earn a variable rate of 3.00 % AER from £1, and 0.50% AER on any funds over £20,000.
• A gift of a Stanley money box on account opening (subject to availability).
• Parents maintain full control of the child’s account until they turn 16. Before the child's 16th birthday we'll write to parents reminding them that the account will convert into an Easy Saver with bonus solely in the child's name. If parents would prefer the money to be paid into a different account either for their child to manage themselves or for them to manage on their behalf, we'll let them know how to do this.
• Customers must have a Lloyds Bank current account in order to open a Young Saver.
• One Young Saver account per child.
• Register for Save the Change® and watch their savings grow even faster.
• Instant access through a Lloyds Bank branch.