In light of the credit crunch and the associated drying up of traditional credit funds a new report that is interesting, timely, and personally relevant has been made available. It states that 55% of parents have given or lent their children or grandchildren an average of £12,000 in the last year.
Parents helping kids financially
The YouGov poll of 5,783 adults suggested a 16% increase in the number of parents giving or lending money to their offspring, compared with 39% last year.
More than half (52%) also claimed that they were expecting to have to hand over some more in the future.
More than a third (36%) of those asked said that they had been planning to use the money in retirement, although 63% said they were happy to help out.
‘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,’ said a spokesperson for the polling organisation.
Four in ten (42%) of recipients use the money to pay off debts, compared with 22% last year, the survey says, while one in three used it to get on the property ladder.
The 29% that used it to help buy a house is expected in increase this year following the recent end of 125% mortgage deals and a squeeze on first-time buyers when Nationwide interest rates for borrowers without substantial deposits were raised.
Kids borrow money for cars
Other typical uses for the loans were to pay for a car, living expenses, education fees or household expenses such as furnishings, the survey said.
There is a slight feeling that this survey is just stating the obvious since most people can figure out that wealthy parents continue to help their children financially far beyond their schooling and university.
The wider effects of this on the economy are varied. Consumer spending will be helped despite the down turn in credit. However, pressure on pension funds, both public and private, will increase since peoples wealth is passing down the family rather than providing for their retirement.