How Much Should You Be Saving for Your Kids? (Reality Check)

Every parent feels the weight of this question. You want to give your children every opportunity. You've seen the headlines: university fees are £9,250/year, house deposits require £50,000+, and the future looks expensive.

So you either panic-save beyond your means, or you're paralysed by the impossibility of it all and save nothing.

Both responses are understandable. Neither is helpful.

Let's look at this realistically: what things actually cost, what various savings rates can achieve, and how to build a sustainable plan that helps your children without sacrificing your present.

What are you actually saving for?
The real costs in 2026
What different savings rates achieve
The priority order for family finances
Practical approaches that work
Frequently Asked Questions
Next Steps

What Are You Actually Saving For? {#what-are-you-actually-saving-for}

Before you set a target, you need to know the destination.

University?

Current tuition fees are £9,250/year (England). A three-year degree costs £27,750 in fees alone. Add living costs of £12,000-15,000/year, and you're looking at £63,000-72,000 total.

But here's the thing: Student loans exist. Your child can borrow this money and repay it only when earning over £25,000, at 9% of income above that threshold. The loan is written off after 40 years.

For many graduates, student loans function more like a graduate tax than true debt. High earners repay more; lower earners repay less or nothing.

So do you need to save the full university cost? Not necessarily. But having some savings:

Reduces the loan burden
Covers things loans don't (laptops, accommodation deposits, emergencies)
Gives flexibility if they take a year out or change plans

House deposit?

Average UK house price in 2026: approximately £290,000. A 10% deposit: £29,000.

In London and the South East, add another 50-100% to those figures.

If you want to give your child a meaningful deposit contribution, you're looking at £20,000-£50,000+ depending on where they'll buy.

Reality check: House prices in 18 years are unpredictable. Markets change, government schemes come and go, and your child's circumstances will determine where and when they buy. You can't predict or fully fund this.

Gap year, car, wedding, or just a head start?

Maybe you're not thinking about specific milestones. Maybe you just want your child to have options. A £25,000 pot at 18 opens doors - whether that's travel, starting a business, learning to drive, or a deposit on a first rental.

The honest truth

You cannot fully fund your child's future. That's not failure - it's reality. What you can do is give them a meaningful head start, teach them about money, and equip them to build their own financial security.

The Real Costs in 2026 {#the-real-costs-in-2026}

Let's put concrete numbers on things:

Life Stage	Cost Range	Notes
University (3 years)	£55,000-£75,000	Fees + living costs; loans available
House deposit (10%)	£25,000-£60,000	Varies hugely by region
Car (first car)	£5,000-£15,000	Could be much less if secondhand
Wedding contribution	£5,000-£20,000	If you choose to contribute
Gap year	£5,000-£15,000	Depends on destinations and duration
Driving lessons + test	£2,000-£3,000	Average in 2026

Looking at these numbers, £50,000 saved by 18 would be transformative. £25,000 would be very helpful. £10,000 is still meaningful.

What Different Savings Rates Achieve {#what-different-savings-rates-achieve}

Let's run the numbers with different monthly contributions, assuming:

18 years of saving (from birth)
Invested in a Junior Stocks & Shares ISA
Average annual growth of 5-7% after fees (reasonable long-term assumption)

Monthly Saving	Total Contributed	Projected Value at 18 (5% growth)	Projected Value at 18 (7% growth)
£25	£5,400	£8,500	£10,500
£50	£10,800	£17,000	£21,000
£100	£21,600	£34,000	£42,000
£200	£43,200	£68,000	£84,000
£400	£86,400	£136,000	£168,000
£750 (JISA max)	£162,000	£255,000	£315,000

Key insight: At £100/month, you'd contribute £21,600 over 18 years but end up with £34,000-£42,000 thanks to compound growth. Time is your biggest asset.

The Junior ISA limit for 2025/26 is £9,000/year (£750/month). Most families can't hit that, and that's fine. The table above shows what's achievable at realistic levels.

The Priority Order for Family Finances {#the-priority-order-for-family-finances}

Here's the uncomfortable truth: saving for your children should NOT be your top priority.

The correct order:

1. Emergency fund

3-6 months of essential expenses in easy-access savings. Without this, one car breakdown or job loss sends you into debt. Your children need you to be financially stable.

2. Adequate protection

Life insurance, critical illness cover if affordable, and a will. If something happens to you, insurance provides far more than years of savings could.

3. Your pension

You can borrow for university. You cannot borrow for retirement. Every pound in your pension is tax-efficient (20-40% boost from tax relief) and compounds for decades.

If your employer matches pension contributions and you're not contributing enough to get the full match, you're literally leaving free money on the table.

4. High-interest debt

Credit card debt at 20%+ interest destroys wealth. Clear this before saving for children.

5. Then children's savings

Only after the above are handled should you save specifically for children.

This isn't selfish. It's pragmatic. A parent with no retirement savings, no emergency fund, and inadequate insurance is a liability to their children's future, not an asset.

Practical Approaches That Work {#practical-approaches-that-work}

Start small, start now

Even £25/month from birth builds to £8,500-£10,500 by 18. That's better than waiting until you can afford more and missing years of compound growth.

Start with what you can genuinely sustain. You can always increase it later as your income grows or other expenses reduce.

Use a Junior ISA

Tax-free growth is powerful over 18 years. Two options:

Junior Cash ISA: Safe, predictable, low returns (2-5%). Good if you're very risk-averse or your child is nearing 18.

Junior Stocks & Shares ISA: More volatile, higher expected returns (5-7% average long-term). Better for long time horizons.

For money you won't touch for 10+ years, stocks and shares historically outperform cash significantly, despite short-term volatility.

Make it automatic

Set up a standing order on payday. Money you never see is money you don't miss. Treat it like a bill, not a discretionary choice.

Involve grandparents

Birthday and Christmas money can go into the JISA instead of toys that get forgotten. Grandparents often want to contribute to something meaningful. The JISA limit is per child, not per contributor - everyone can add to the same pot.

Match gifts

Tell family members: "Instead of gifts, please put money in Ella's savings." Even half of what would be spent on presents can add up significantly.

Use windfalls wisely

Tax refunds, bonuses, gifts - automatically divert a portion to children's savings. If you've never had the money in your current account, you won't miss it.

Review annually

Each birthday, review the pot. Are you on track? Can you increase contributions? Has anything changed?

The Mindset Shift You Need

Stop thinking about saving "enough." There is no enough. House prices, university costs, and living expenses will change unpredictably over 18 years.

Instead, think about:

What can I sustain? A realistic monthly amount that doesn't strain your current finances
What habits am I teaching? Children learn from watching. If they see you saving consistently, they'll learn to do the same
What doors am I opening? You're not funding their entire future - you're giving them options

Your children's financial success will ultimately depend on their own earning, saving, and decision-making. You're providing a head start, not a finish line.

Frequently Asked Questions {#frequently-asked-questions}

Key Takeaways

There's no "right" amount. What matters is starting, sustaining, and not compromising your own financial security
Compound growth is powerful. £100/month from birth becomes £34,000-£42,000 by 18 - nearly doubling your contributions
Priority order matters. Emergency fund, pension, protection BEFORE children's savings
Junior ISAs are the best vehicle. Tax-free growth, £9,000/year limit, Stocks & Shares for long horizons
Involve everyone. Grandparents, family gifts, windfalls - all can contribute
Something beats nothing. Even £25/month makes a meaningful difference over 18 years

Next Steps {#next-steps}

This week:

Check your emergency fund status (aim for 3-6 months expenses)
Confirm you're getting your full employer pension match
Decide on a sustainable monthly amount for children's savings - even if it's just £25

This month:

Open a Junior Stocks & Shares ISA (platforms like Vanguard, Fidelity, or AJ Bell)
Set up a standing order from your account on payday
Tell grandparents about the JISA for birthday/Christmas contributions

Annually:

Review the pot on your child's birthday
Consider increasing contributions as your income grows
Adjust investment strategy as they approach 18 (shift toward lower risk)

Related Articles:

Junior ISAs Explained - Complete guide to starting and managing a JISA
Can't Afford a Financial Advisor? - How to sort your finances without paying professional fees
The Complete Family Protection Plan - Everything in one place

Last updated: January 2026. This article is for informational purposes only and does not constitute financial advice. Investment values can go down as well as up. Junior ISA allowances and rules may change.