Saving and investing news

Forget the bank of Mum and Dad: leave it to Granny

7 September, 2007

It seems the purse strings of the Bank of Mum and Dad have been pulled tighter, perhaps because today’s parents have more credit commitments.

One in nine grandparents admit that they’re putting money aside because they’re concerned that the child’s parents cannot adequately provide for their offspring nad a further 13 per cent admit it’s because they’re simply concerned their grandchildren will have a lower quality of life than their own.

The study by CreditExpert.co.uk, the online credit monitoring service from Experian, also shows that many grandparents are putting money away for a specific cause, with a quarter wanting to fund their grandchild’s education and one in six trying to help them get onto the property ladder.

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Jim Hodgkins, managing director of CreditExpert.co.uk, said: “It seems many grandparents are stepping up to fill the financial void of the ‘credit generation’ whose money is increasingly tied up in mortgages, loans and credit agreements.

“The concept of grandparents putting money aside for their grandchildren is not new, but the reasons why they give money certainly seem to be. A decade ago many would have just given their grandchildren birthday money or to set up a building society account. Nowadays, it’s more likely to help the child onto the property ladder, one of the defining struggles young people face in today’s society.”

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Grandparents are giving the money in a variety of ways, with one in five providing only when they can afford to, compared to one in 20 who put a significant sum away each month and the same amount who put money aside that can only be accessed at a certain age.

Hodgkins said: “Assisting grandchildren financially can give them the helping hand they need as they reach adulthood, but it’s important that young people learn to properly manage their finances on their own and don’t rely too much on handouts.”