The Bank of Mum and Dad… and Nan… and Grandad
Few parents see their child’s 18th birthday as a marker of their financial independence, with only one in five (21%) believing they will stop financially supporting their children at this age.
At the other end of the spectrum, some parents are keen on instilling financial independence; more than 10% of parents, who do not believe they can fund their children beyond 18, say it is simply no longer their responsibility.
It is also clear that parents are not the only stakeholders expected to fund a child’s financial future. The majority of parents are relying on their own parents for financial support for their adult children. More than 65% believe contributions to their child’s ISA will come direct from grandparents. In addition, almost one in six (16%) parents expects to make lump sum payments into their children’s savings via inheritance.
Previous research from Legal & General Investments has revealed that UK parents are currently putting aside on average £42.45 per month per child, creating a pot likely to reach £14,716 based on current deposit levels.
Simon Ellis, managing director, Legal & General Investments said: “The cost of living is going up and the cost of raising a child is going up with it. However, it is still shocking to find that 27% of parents never expect their children to be financially independent.
“With first-time buyers requiring large deposits and university fees set to reach almost £10,000 a year, bankrolling your children after their 18th birthdays is becoming a norm for many parents. This trend significantly increases the strain on parental finances and will no doubt change the way future parents save for their children. Understandably, all parents want to give their children the best possible start and offer them both choice and opportunity during their adult years.”