Parents across the UK have withdrawn a total sum of £2.75bn from their children’s savings since the beginning of lockdown on 23 March, new research from Direct Line Life Insurance has revealed.

The research suggested that families have needed to rely on their children’s savings to get them through the impact of reduced salaries or unexpected unemployment caused by COVID-19.

Direct Line’s study among 2,000 UK adults indicated that almost eight million parents (23%) have had to dip into their child’s savings since lockdown began. On average, each family has needed around £700 from their child’s savings account, which equates to a total sum across the UK of nearly £17m for every day of lockdown.

The research also suggested the lasting impact of the pandemic means families are expected to take even more from their children’s savings in the future. On average, the study found that families predicted they would need to withdraw £862 from their children – equating to a total of £3.4bn to help keep them afloat during the crisis. 
 
More than a fifth (22%) of parents also don’t believe they will be in a position to replenish lost savings in the future, Direct Line added, meaning children’s savings accounts across the country could lose an estimated £960m between September and December 2020 alone.

“The impact of the coronavirus pandemic has been severe and unfortunately means many families are facing tough financial decisions,” commented Direct Line Life Insurance business manager, Chloe Couper.

“Widespread redundancies, furloughing and pay reductions have resulted in many households across the country having to cope on a lower income and try to reduce their spending. While it is understandable that parents feel they need to utilise any savings they and their children have to cover costs, this could have a negative long-term impact on their children if this money was being set aside for things like university fees or property deposits.

“2020 has shown us that worst case scenarios sometimes happen, and we may not know what’s around the corner despite best laid plans. Many people will now be thinking about the future and how they would provide for their family if anything happened to them and a life insurance policy can help provide this peace of mind.”

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