• Emma Wallington

Are you losing money on your child's savings

Inflation is why the cost of everything seems to go up over time! For example, the same pair of children's shoes costing £10 in 1980 would cost £43.20 in 2019.

In the context of savings, this is like putting £50 under your mattress back in 1980; it would be able to buy only £12 worth of goodies in 2019 - bad, bad, bad!

The image above shows that inflation has averaged 1.06% in 2020 (however it was much higher in January pre-pandemic), therefore the interest earned on savings must exceed this to avoid devaluing our children's precious money saved. This is worth knowing in times of historically low interest rates (some NS&I savings accounts are paying 0.01%!)

This is why we need to ensure that we get a good return on our children's savings; to ensure the value of the money exceeds (or at least keeps up with!) inflation. Otherwise, in the future, the savings pot will be able to buy less than today.

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