Simple way to help your children become £70,000 richer in retirement
Many people begin to think about their own retirement as they go about their working life, but by providing financial education for their children, the next generation could reap huge financial rewards. As well as healthier retirement prospects, children could benefit greatly in various ways from financial education, according to a study from GoHenry.
Those who received financial education as children are likely to be far richer in retirement. Adults who learnt money lessons are saving on average 43 percent more into their pension plans per month compared to those who did not.
The increase in the average pension pot for someone saving £149 per month compared to someone saving £104 per month would amount to £71,250 over a 40-year working lifetime.
Someone earning the national average would need to work more than two years extra to make up this shortfall.
According to GoHenry’s calculations, someone saving £45.58 into a pension pot each month would amass a final pension valued at £71,250 when they turn 67.
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Nearly half (46 percent) of those who did not receive any financial education as a child are earning £15,000 or less annually, less than half of the national average income.
Adults who do not learn about money when they are young are also less able to save and more likely to fall into debt.
Over half (51 percent) of those who received financial education as a child have up to £5,000 cash savings in an ISA or savings account compared to under a third (30 percent) of those who did not.
Some 40 percent of those who did not receive financial education said they have no savings at all and cannot afford to save. They could also be getting into debt via missed payments.
Furthermore, 79 percent of adults who did not receive financial education have fallen behind on utility bills or council tax payments over the last six months.
GoHenry believes that prioritising financial education could add an extra £6.98billion to the UK economy each year, and £202billion by 2050.
The research shows that if all adults had the opportunity to receive financial education when they were school age, the boost to annual business formation in the UK could amount to an additional 76,400 businesses each year.
This would result in an annual increase of 123,000 direct jobs which could reduce unemployment in the UK by over eight percent.
Louise Hill, co-founder and Chief Operating Officer (COO) of GoHenry said: “These findings clearly demonstrate the positive impact that financial education has on individuals, businesses and the wider UK economy.
“The Autumn Budget neglected to recognise the importance of financial education for young people, despite the fact that poor numeracy can cost individuals up to £1,600 a year in lost earnings as an adult.
“It is vital that we teach these essential life skills much earlier to bridge the financial capability gap that is costing the UK billions every year.”
Commenting on the findings, Stephen Lucas, Economist at Development Economics added: “The opportunity to receive financial education clearly has powerful benefits for children later on in life.”
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