Children ‘Look To Parents For Financial Assistance’
Grown-up children are placing an increasing financial burden on their parents and grandparents, new research indicates.
A study conducted by Scottish Widows reveals that the average mother and father have given a total of 12,610 pounds from their savings and investments accounts to their adult offspring. Such donations account to an overall “savings sap” of 67 billion pounds. Findings from the financial services firm also indicated that more than a fifth (21.7 per cent) of British households have at some point given money to their grown-up children. Furthermore, over half of those which have already dipped into their own pockets believe that they will be required to lend more financial assistance in the future. Such people think they will have to shell out an average of 11,585 pounds.
Just under a third of consumers were shown as donating to assist with the purchasing of a house, with 14 per cent making contributions towards education fees. Findings from the firm also indicated that 42 per cent of parents giving money to their children have done so to help them pay off debts. Such a figure reflects an increase from the 22 per cent recorded in the same study in 2007.
As a result of such donations, many young people could discover they are able to pay back loans and plastic cards with greater ease.
However, after handing out money to their sons and daughters it is possible that many consumers could find the strains on their own finances increasing. And with a shortfall in the amount of money they have in their saving accounts, it may be possible that Britons could encounter difficulties in paying financial demands such as personal loans, household bills and credit cards.
Anne Young, savings expert for Scottish Widows, said: “It seems that although people could well be tightening the purse strings at a time when the credit crunch could affect finances, adult children are still managing to extract what they can from mum and dad. Both the amount of money given and the number of children sapping has increased in the last year, to the extent that the overall sap fund is well in excess of 60 billion pounds. That’s a significant amount and the glaring hole in parents’ finances needs to be replaced, or prepared for in the first instance, as the problem is clearly not going to go away.”
Ms Young added that although parents are increasingly being called upon to provide an “emergency loan” to their children, both sets of consumers should take steps to try and avoid incurring coming under such pressure. It was suggested that by regularly saving into a tax-efficient product people should be able to generate a “substantial amount” quickly.
For those concerned about how their children will manage with money, taking out a low-rate loan could help parents to provide fiscal assistance. Meanwhile, for those concerned about their saving accounts, using a cheap loan as a means of consolidating debts could help borrowers to free up more disposable income each month. Such cash could then be invested into a saving or investment scheme. A recent Equifax study indicated that 11 per cent of parents are helping their children take their first steps on to the housing ladder. Meanwhile, an estimated 83 per cent are giving financial assistance with higher education expenses.
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