Few parents would argue that teaching children about the value of money and the importance of saving for the things you want is an important part of growing up.
For some it’s about encouraging children to save for themselves, while others want to put money aside on behalf of a child in order to support them in later life. Either way, people will be looking for guidance and a range of good quality products to choose from through their bank or building society.
At the West Brom we are in the process of refreshing our range of children’s accounts and we want to ensure what we present to customers accurately reflects their preferences.
That’s why we turned to members of our customer panel to learn about their own experiences, current savings plans and what features or incentives they would expect to see in products designed for children.
How and why
We asked panel members with children who are saving – plus those who know children with their own savings accounts – where their money was coming from.
You told us most (67%) were saving money given to them at Christmas or for other special occasions, while 59% were saving birthday money. Two fifths (39%) are investing their pocket money and a quarter (24%) are saving money they have earned.
We found there isn’t always a definite reason or end goal for children saving – indeed, 63% could point to nothing specific that the child would be using the money for.
However, for those who did have a goal in mind the most common was computer or console games (14%), followed by holidays (12%), a special occasion (11%) and clothes or shoes (8%).
Younger children (under 7s) were also saving for new toys (11%) and some of those aged 12-16 were saving up for a new mobile phone (10%).
Other reasons given for saving included longer term aims such as going to university or paying for driving lessons. Some even said they had started to save for a deposit for their first house.
We also wanted to know if anyone else pays into the child’s account and nearly half of parents (46%) said they contributed. Grandparents also made deposits (39%) along with other family members and friends (16%).
But money from ‘the bank of mum and dad’ isn’t always a given – around one third of respondents (33%) said only the child was saving and nobody else made payments into the account.
The things that matter
It was clear from our customers that two features were particularly important when setting up a children’s account – getting the best interest rate (57%) and having a branch close by in order to manage it (56%).
Also valued was the ability for different people to be able to pay money in (21%) and educational support for children to learn about money management (17%).
You said you were less interested in the child having online access for account management purposes (12%) or a coin counter in the branch to help pay in loose change (4%).
Of course many adult savers will have fond memories from their own childhood about being incentivised to save (NatWest piggy banks, anyone?), which is why we asked what gifts or rewards you would want to see from our range of accounts.
Most respondents (44%) thought a small monetary payment in return for regular saving was best and would appeal to children. Money upfront for opening a new account was also popular (32%), while parents with younger children felt the good old fashioned moneybox was still a winner (47%).
Other suggestions included tickets to the cinema or other local attractions and a specially designed kids’ passbook.
Finally we asked panel members what they think should happen to the account as the child gets older, hopefully ensuring they continue to save in the future.
An overwhelming 82% wanted the product to automatically mature into an adult savings account once the child reaches the age of 16. Four in ten (42%) felt the child should receive a debit or ATM card when old enough in order to access their money and 39% wanted to see their bank or building society offer some advice about good money management.
A head start
The second part of our survey was to learn more about those adults who are saving in an account of their own, but on behalf of a child.
Most respondents (53%) were grandparents saving for their grandchildren. They were mainly saving on a monthly basis (54%) and said the main reason for having the account was to give the child ‘a bit of a head start’ (64%).
Other reasons for saving specifically for children included teaching them how to manage their money (45%), covering the cost of higher education (36%), buying a car (23%) and having money available in case of an emergency (21%).
Maintaining control of the account was particularly important to adult savers in terms of features (66%) and, unsurprisingly, it also mattered that the account was paying a high interest rate (60%).
How this helps us
We are very grateful to customers who responded to this survey and the results are certainly proving useful.
Sophie Dwyer is the West Brom’s Product Manager responsible for savings accounts and will be using your feedback to help finalise a new range of products for young savers.
She said: “This information will help us enormously in terms of how we develop the products and add features that will encourage children to save on a regular basis.
“It is also useful to know who else might be contributing to the account so that we can make them aware of what products the West Brom has available, for example parents and grandparents.
“Financial institutions have a certain responsibility to teach young people the importance of saving for the things they want and not to be overly reliant on credit and borrowing. This approach starts with having access to the right kind of savings account from an early age and we look forward to sharing details of our full product range in the future.”