A Recent UNest/Harris Poll Shows that Parents Saving for their Kids has Increased Dramatically Throughout the Pandemic
2020 was quite a year. No one could have predicted the impact that COVID would have on everyone’s lives. From the devastating healthcare toll to the changes we all faced in even the most mundane aspects of our lives, the pandemic was a game-changer. American families were faced with a new set of financial challenges —market volatility, widespread unemployment and shuttered businesses all took their toll on consumer confidence. Thankfully, the response to the tough COVID economy was for American families to save more and prioritize the fundamentals — the future of their kids.
We were inspired to see family after family step up to the plate and set up their UNest Investment Accounts for Kids. Over the course of 2020, hundreds of UNest families turned into thousands. Then tens of thousands, and now over a 100,000. While we could see that there were more parents than ever before saving for their kids’ futures, we wanted to understand to what extent the pandemic had impacted how parents prioritized saving. What was the most important goal for parents when allocating their money? Were parents more or less confident about meeting their financial goals? What were parents prepared to sacrifice to gain more financial freedom?
To answer these questions and more, we teamed up with The Harris Poll and Caliber Intelligence to conduct a survey of thousands of consumers. The top level finding? Despite new financial strains due to COVID, parents are saving more, and conclusively place their children’s future as their most pressing savings goal.
Diving into the Numbers
The survey revealed that among parents with children 17 or younger, 44% say that if they could only save for one thing in life, saving for their children would be their most important savings goal. This was far ahead of the second choice of retirement which was selected by 18% of the same group of parents. The delta between savings for children versus retirement was even wider for lower income families: for parents with children 17 or younger in lower-income households (<$50,000 annually), saving for children (49%) holds the largest lead over retirement (9%).
The survey also unearthed a disparity between the genders on how confident they were on being able to save for their child’s college education. Moms are more stressed about affording college than dads. One-in-four (26%) moms with young children (17 or younger) are not at all confident about affording college for their child(ren) without borrowing money or taking a loan, compared to 13% of dads. Conversely, 30% of dads feel extremely confident about affording college without debt, compared to only 13% of moms.
Relative to the pandemic, half (51%) of parents with young children (17 or younger) told us that COVID-19 has increased their desire to save for their children’s future. This desire is led by dads (57%) over moms (46%).
Pragmatic Choices for the Future
The survey also identified that parents value flexibility in how they use the money they save for their children’s education as much as they value the tax saving associated with college saving plans. In particular, moms (37%) are significantly more likely than dads (24%) to prefer flexibility in use of funds to ensure they can use it for multiple purposes over education specific tax-free savings. In contrast, dads (42%) are more likely than moms (21%) to prefer saving for their child’s education in a specific education fund, but only if it is tax-free.
Additionally, the survey revealed that vacations, new cars, dining out and socializing are the top sacrifices parents would be prepared to make if it meant their child would have a healthier savings nest egg. Close to half of parents with a child 17 or younger would give up vacations or buying a new car (both at 44%), roughly tied with the 42% that would give up dining out or socializing if it would help secure their children’s future. In general, the overwhelming majority (93%) of parents with kids under 17 are willing to make a self-sacrifice if it means their child would have a healthier financial future.
The parents of young children also responded positively about receiving monetary gifts for their children rather than toys, clothes, and other gifts. Nearly half (47%) of parents with young children say a contribution to their child’s college savings account is a valuable gift from family members and friends. The desired financial gifts that parents value include cash/gift cards (65%) or financial investments (i.e., contribution to college savings account & stock or other investments (61%).
The results of the UNest/Harris Poll are consistent with the 2020 Planning & Progress Study conducted by Northwestern Mutual. This survey identifies that nearly three out of ten (28%) millennials have revisited their plans and made significant adjustments because of the pandemic, more than any other generation. The 2020 Planning & Progress Study also points to the fact that 29% of Americans work with a financial advisor and 65% do not. Additional studies by Northwestern Mutual have shown that U.S. adults who work with a financial advisor report “substantially greater financial security, confidence and clarity than those who go it alone”.
Maintaining the Momentum — $25 When You Open a New UNest Investment Account for Kids
In recognition of how COVID has increased the desire of parents to save, customers that sign up for a new UNest Investment Account for Kids by the end of February will also receive $25 from UNest to kickstart their family’s savings plan.
You can read more about the results of the UNest/Harris Poll here.