London’s ’stingy’ parents best at saving for kids’ futures

New research of parents’ spending habits by Engage Mutual suggests there is a direct trade-off between giving children generous pocket money allowances and saving for their future.

The study reveals that London is the bottom of England’s pocket money league – with just a third of the capital’s parents giving their children an allowance – but conversely it is the region where parents are most likely to save for their children’s future, with four out of ten doing so.

By comparison, in the East Midlands fewer than a fifth of parents make such provisions and yet they are the most generous on the pocket money front, with 55 per cent dishing out regular allowances.

Scottish parents, meanwhile, scored consistently low on both fronts, with only 37 per cent handing out pocket money and 40 per cent setting aside savings.

On a national level the proportion of parents saving for their child’s future stands at 32 per cent, its highest level for over a year.

Karl Elliott, 3GB spokesperson for Engage Mutual, commented: “In a credit card society that is driven by a have-it-now culture, it is pleasing that so many parents are saving for their kid’s future”.

He added: “Those children in areas where parents are the tightest on pocket money will thank them in years to come when they enjoy the benefits of a healthy, matured savings fund.”

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Interest rates rise

Credit card and mortgage holders and those with loans have been hit with yet another interest rate rise.

The Bank of England’s Monetry Policy Committee (MPC) has decided to increase the base rate to its highest level for six years.

It now stands at 5.75 per cent and some industry experts have been warning of big financial repercussions for many people.

The decision by the MPC is the fifth rate rise in a year and many borrowers simply would not have been prepared.

Industry figures have been predicting rises for some time and this latest one came as no surprise, but those who borrowed money a few years ago had no idea that things would change so much.

The MPC took the decision in an attempt to bring inflation under control.

“The committee judged that, relative to the two per cent target, the balance of risks to the outlook for inflation in the medium term continued to lie to the upside,” the MPC said in a statement.

“Against that background, it further judged that an increase in Bank Rate of 0.25 percentage points to 5.75 per cent was necessary to meet the two per cent target for CPI [Consumer Price Index] inflation in the medium term.”

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Surprise interest rate rise

The Bank of England has stunned economists by raising the interest rate to its highest level for six years.

In the build up to the decision being announced, it was considered by almost everyone in the industry that the rate would be held.

However, on Thursday January 11th, it was announced that the interest rate would rise by 0.25 per cent, taking it to 5.25 per cent.

It is the third time since August that the Bank of England has increased the rate by 0.25 per cent and is bad news for people with mortgages.

“This is another rise in a short period of time that could hit some homeowners hard,” said Peter Tutton from Citizens Advice.

“We are already seeing a rapidly growing number of people falling behind with mortgage payments and in some cases threatened with repossession, and we know some people are taking on mortgages that stretch them to the absolute limit.

“Any increase in mortgage interest rates could spell disaster for people whose finances are balanced on the very edge of affordability,” he added.

The rate rise is good news for savers however, although the uncertainty created by today’s announcement is unstabling for most people.

“Markets are going to be wondering if this marks a more intensive process of monetary tightening,” Peter Dixon, economist at Commerzbank, told Reuters.

“Is the bank going to raise again? That’s the question that is going to be ringing round the dealing rooms this afternoon.”

Tags: homeowners, Federal Reserve System, advice, economists, limit, today's announcement, highest level, absolute limit