When it comes to those who are the most financially stretched, it’s the over 30s who are most likely to ask their parents for help (45%), with one in ten parents admitting to gifting over £21K and one in five gifting over £11K for anything from a first car to a house deposit.
With growing pressure for parents to pick up their children’s financial pieces, 42% of parents with children over 30 admit they are using their own savings and disposable income to help, and in doing so they could be compromising their own financial future.
Commenting on the findings, Jamie Smith-Thompson said: “If you’re in a position where you can offer some financial help to your children, that’s great. Understandably, in the current climate, not everyone can help in the way they would like to. And that can lead to people feeling guilty, even though they shouldn’t do.
“One thing that commonly gets put on the back burner once children come along is saving for your own future. And because the cost of raising children doesn’t ease off, it’s easy for your retirement savings to continue to take a back seat to the costs that arise with family life.
“If you’re yet to start planning for your retirement, and you’re hoping to help your grown-up kids, you’ll need to decide whether you can realistically pay into your pension and still help them in the way you had hoped. Parents shouldn’t feel guilty for being a bit more me, myself and I when it comes to saving for their own future. A comfortable retirement is important, and your children do have their own opportunities to save for themselves.
Experts at Portafina advise that for parents of younger children there are ways to save for their future over time to reduce the impact of a big financial hand out in the future.
Jamie added: “With as little as £1 you can open a bank or building society account for any child under the age of 18. While there’s not much return for your money, it’s a useful start to teaching young children about paying in and withdrawing money.
“Junior Cash ISAs & Junior Stocks and Shares ISAs are a popular choice and can offer slightly better rates than a bank account. The money is locked away until your child is 18 and as such they’re handy accounts for things like university fees or a first car.
“Then there’s a pension. It might not be the obvious choice, but it could supercharge your child’s savings. Although it may feel a long way off until they can get their hands on their pot, the rewards from starting your child’s pension early are hard to ignore. Saving £50 a month from your child’s 5th birthday could mean they have nearly 4 times more in their pension pot than if they were to start saving the same amount themselves from their 25th birthday*.
“Saving for a child doesn’t escape tax rules and other regulations. So, when considering the best option for your family you should speak with a regulated financial adviser. They can explain everything clearly to you to help you decide the best tool to give your child a financial head start in life.”
From phone bills to petrol and mortgages to marriage, what exactly are parents helping their adult children to pay for? Find out more here: https://www.portafina.co.uk/blog/bank-of-mum-and-dad/