Over three in five (62%) parents in the UK are giving, or plan to give, their children aged 18 or over more financial help than they received from their own parents, according to research from Standard Life. It found parents are supporting their children, or expecting to support them, for a range of costs including university and education fees, university accommodation and living costs, debts, weddings, house deposits and other finances into adulthood.
According to the research, over half (52%) of parents who have or will help support their grown up children feel “it is their duty as a parent” to financially support them. A third (35%) worries that without financial help their children would suffer and not achieve their full potential. A similar number (37%) recognises that given the current economy their children will not be able to fund themselves straight away. This pressure is resulting in parents spending or expecting to spend an average of £15,495 for each child aged 18 or over. A third (33%) of parents have, or expect to have, to financially support not just their children but also any grandchildren.
What are parents helping or expecting to help their grown up children with?
- 38% expect to help or have helped foot the wedding bill – the most significant cost, with university fees second
- More than one in three (37%) parents pay University or education Fees or expect to do so
- Just under a third (32%) are paying towards university accommodation and living costs or plan to
- Over a third (34%) also pay towards their child’s car or expect to do so
- More than a quarter (26%) are likely to pay or have paid towards a deposit for a first home
- A quarter (24%) expect to help or have helped with mortgage, credit card, and other debts.
Julie Russell, Head of Customer Relationships at Standard Life, comments: “The economic downturn and price increases have left many parents expecting to have to financially support their children into adulthood. This creates a significant challenge – how to balance the desire to provide for your child, even when they become adults, as well as save to secure your future. The only way to achieve this is through careful financial planning, so that the financial sacrifices parents make for their grown up children are not to the significant detriment of their own long term plans.
“Parents need to make sure their money works as hard for them as they are working for their children. That means being efficient with their savings and making the most of tax breaks offered by products like ISAs and pensions.”
Two top tax tips
- Remember that pensions are a really tax efficient way to save. For every £4 you contribute, the government effectively contributes £1 as it rebates the income tax on your contributions. And if you’re in a workplace scheme, your employer is likely to be topping up your contributions too.
- ISAs help you to build up a tax free cash lump sum, which can be used to pay for a child’s wedding or to fund university fees. You can invest up to half of the annual ISA allowance in a Cash ISA and earmark that to help you and your children with more immediate costs. And you can consider investing the remainder of your allowance in a stocks and shares ISA which has the potential of greater tax efficient growth over the longer term to help with larger future costs