22nd July 2013
British grandparents are digging deep to help their children and grandchildren by contributing billions of pounds every year towards everyday family costs and long-term savings, according to the latest research from J.P. Morgan Asset Management.
The research polled more than 1,000 of the nation’s grandparents on the ways they help their families financially. It found 42% of grandparents are saving for their grand children’s future, and during the last year have put away an average of £154 each – or £2.4 billion collectively – with a savings account being the most popular way to save. Of those who aren’t saving for their grandchildren, 55% say it’s because they simply can’t afford it, while one in six say that parents or other family members are already taking care of this, and one in ten say they just don’t want to.
The research also found many grandparents are contributing financially to the day-to-day costs of raising children – to the tune of £257 each a year, or more than £4 billion collectively. Some 36% helped buy clothes and school uniforms, 29% pay for shoes and 16% help cover the cost of school trips. Twelve per cent are also paying for, or towards, improvements for the family home.
Grandparents are also generous with their time with 36% of those who say they look after their grandchildren for free doing so for more than 10 hours during an average week. Those who don’t provide care for their grandchildren put it mainly down to distance: 67% admit they can’t help because they don’t live near enough, while one in 10 say they don’t have time because of work and other commitments.
Keith Evins, Head of UK Funds Marketing at J. P. Morgan Asset Management, said: “Bringing up a family while making ends meet is certainly no mean feat. Fortunately, the nation’s grandparents are helping their families financially and with their time, too. As parents and grandparents it’s important we do as much as possible to lay a good financial foundation for our families, so it’s encouraging to see generations rallying round each other with support.”
The research also polled grandparents on the ways they have contributed financially to the lives of their grown-up children. Some 36% say they help out with everyday living costs, and 19% have helped with a deposit for a home. Grandparents also assist with the cost of a wedding 32%, buying a car 31%, and with the cost of holidays 28%. Furthermore, 5% help their grown-up children with their monthly mortgage payments. But while two-thirds of grandparents (64%) wouldn’t ask their grown-up children for the money back, a quarter say that they would; 8% have agreed to repayment terms, and 5% have already asked for the cash back.
Evins added: “It’s fantastic that grandparents are able to provide such a level of both practical and financial help with their grandchildren, and indeed their own grown-up children. More than £2 billion a year in savings for their grand children’s future is a really significant figure. However, the fact that the majority of this money is going into bank and building society accounts suggests grandparents could be missing a more productive approach. Investing for children can be a great opportunity to take advantage of a long-term time horizon, and in these times of low interest rates, grandparents might want to consider the greater growth potential of the stock market. While the value of shares can fall as well as rise, a longer investment term can give the opportunity to ride out market volatility.”