- The UK’s parents and grandparents have spent £18billion in the last year supporting their adult children* and grandchildren
- Nearly one in five (18 per cent) parents and grandparents fully support the lifestyles of their offspring
- 17 per cent who provide financial support say they helped to pay off their child or grandchild’s debt
- A third of total savings pots are put aside specifically for their dependents
Parents and grandparents across the UK have spent almost £18 billion** in the last year supporting their adult children and grandchildren – an average of £900 each, according to new research from Post Office Money Savings.
The findings have revealed that nearly one in five (18 per cent) parents and grandparents provide full financial support for their grown up children – with this figure more than doubling (49 per cent) in London where the cost of living is comparatively higher. For those who have provided financial support in the past five years, day-to-day expenses are the most common for them to have funded (39 per cent), although a third have contributed towards holidays (32 per cent) and a quarter have helped pay for household bills (24 per cent). Just under a fifth (17 per cent) have helped to pay off their adult dependents’ debts.
How parents/grandparents financially support their children:
|Day-to-day expenses||39 per cent|
|Holiday||32 per cent|
|University fees and accommodation||26 per cent|
|Driving lessons||24 per cent|
|Household bills||24 per cent|
|New car or running costs||21 per cent|
|Paid off their debt||17 per cent|
|Wedding||17 per cent|
|A new home (e.g. deposit, stamp duty etc.)||16 per cent|
|Contributed to their savings||16 per cent|
|Home improvements or repairs||16 per cent|
|Hobbies||13 per cent|
|Mortgage or rental payments||12 per cent|
|Medical expenses||5 per cent|
More than half (55 per cent) have dipped into their savings to provide financial support for adult children and grandchildren, while 14 per cent have used a credit card.
Many parents now prepare or expect to provide assistance, with more than a third of their money being held in a typical savings pot reserved for helping out younger family members – an average of £4,378. In the majority of cases there has been no agreement to have these donations repaid (58 per cent).
The research also revealed that some parents go to worrying lengths to financially ‘prop up’ younger family members; 30 per cent sacrificed putting money into their own savings, while seven per cent chose to forego making contributions to their pension pot. Seven per cent even skipped paying their own household bills to ensure they could support adult children and grandchildren.
Henk Van Hulle, Post Office Money Savings, said: “Many of today’s millennials*** face an uphill struggle in establishing themselves as financially independent; soaring house prices, the expectation they should be saving for retirement, and meeting day-to-day living costs can add up to significant challenges when it comes to managing their finances.
“Our research shows that the majority of parents feel responsible for continuing to financially provide for their adult children even when they become an adult, as well as also providing for their grandchildren, totalling a huge £18billion a year. While it is understandable they want to help as much as possible, in some cases this is having a detrimental effect upon their own finances and ability to build up a savings pot.”
Although three in five (61 per cent) parents are happy to support their children financially, a fifth (18 per cent) worry about this dependency, with 13 per cent also concerned about the strain it puts on their own finances. Eight per cent actively resent supporting their children financially.
Two fifths (41 per cent) feel it is their parental duty to provide their children with financial support; 32 per cent want them to have an enjoyable lifestyle, while 10 per cent feel guilty about their own circumstances, for example, having benefitted from rising house prices.
Henk Van Hulle added: “We understand that parents feel it is their duty to provide financial support for their struggling children, but it’s also important that they don’t sacrifice their own financial stability. So if people do want to support their children, it’s never too early to think about saving.
“Often it can seem impossible to put savings aside but whether it is on a little-and-often basis or taking advantage of a lump sum, people should do all they can to make sure they are making the most of their tax-free allowance before the end of the financial year in April. At Post Office Money, we offer a range of ISA products to suit a variety of different customer needs. Young parents thinking ahead may even want to consider saving into a Junior ISA so there is an adequate nest egg in place to help their children once they do eventually reach adulthood.”
* Adult children = sons and daughters over 18 years old
**772 respondents said they had provided financial support for their adult children or grandchildren in the past five years. 772 / 2004 *
The total UK adult population is 50,909,000 (UK adult population) as such extrapolating from a nationally representative sample – 48 per cent have adult children and grandchildren and 83 per cent of those that have adult children and grandchildren have provided financial support in the past five years - this means that 19,611,651 people provided financial support for their adult children or grandchildren in the past five years;
The average amount spent providing this support over the last five years is £4,502 – which when multiplied by 19,611,651 = £88,291,652,802; then divide this by 5 to get the annual amount spent supporting adult children and grandchildren: £17,658,330,560 or £18 billion.
*** Millennials – Generation Y born between 1980s and early 2000s
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