One fifth (18 per cent) of British families rely on help from grandparents to provide financial support for grandchildren throughout their childhood, Barclays research reveals today. Across the UK, grandparents are shelling out over £4 billion each year to help families with childhood costs, which equates to an annual average of £2,303 per family.
According to Barclays, almost a quarter (23 per cent) of this cash is used to help children get on to the property ladder, either via house deposits or contributing to mortgage repayments. Additionally, grandparents’ contributions are important early on in life in terms of helping with childcare costs (35 per cent), as well as fees for university education in later years (31 per cent).
However, over a half of grandparents who help their families out do so by giving cash on an ad-hoc basis (58 per cent) and very few take a more structured approach through an annual gift (22 per cent) or planned investment (16 per cent). Whilst ad hoc gifts can be useful to meet immediate needs such as school fees, Barclays warn that this approach may not be the most cost efficient way of supporting a grandchild’s longer-term needs such as university fees or a deposit on a first home.
Barclays estimates that if you had invested the £2,303 (nearly £200 a month) given by grandparents each year in the stock market over the last 18 years, the investment would now be worth £54,760 *. By careful planning and regular investment, the contributions provided by grandparents each year might help towards the £40,000 prospective cost of putting a child through university in 18 years time or to provide the estimated deposit on a first home in 30 years time**. Grandparents based in the South West give the most financial support by giving their grandchildren an average of £4,829 a year, whereas grandparents in the North East are most likely to help out financially (22 per cent) than any other region.
However, many grandparents are not making the most of the £3,000 gift they could make each year which is not eligible for inheritance tax, with only 18% saying they would consider it.
Stephen Ingledew, Director of Barclays Financial Planning, said: “Many families are now finding the need to turn to grandparents for financial support as the cost of property and education bites, and indeed many grandparents will want to help wherever they can. However, we’d urge any current or future grandparents to ensure their finances are working as hard as possible for them and by extension for their grandchildren. A little bit of planning early on can reap benefits for the whole family.
“Many grandparents are generous in giving cash gifts on an ad-hoc basis, such as for birthdays or to help cover a mortgage repayment. But, with an average of £2,303 being handed over by grandparents each year, British grandparents should look at other, more financially sensible options. For example, perhaps look at a planned investment or provide an annual gift such as a cash ISA, where grandparents can save or invest for their grandchildren whilst enjoying tax benefits.”
To help people estimate the possible costs of the various aspects of raising a child from birth to end of university and how to make this achievable, Barclays has produced a booklet called ‘An introduction to preparing for your children’s future.’ Barclays also has a ‘How much?’ tool which illustrates the costs associated with goals parents and grandparents may have for their children at www.barclays.co.uk/children.
For grandparents or parents wishing to seek tailored advice on how to plan their family finances, Barclays has over 700 expert advisers nationwide. To set up a completely free, no obligation appointment with a Barclays adviser, visit your local Barclays branch or call 0845 606 6037 to set up an appointment. All subsequent charges are clear and transparent and advisers receive a salary rather than commission.
Notes to Editors:
Barclays PLC is one of the world’s largest global financial services providers primarily offering banking, investment banking and investment management services. Present in over 60 countries, Barclays is a leading provider of global services to over 20 million customers and employs more than 78,000 people worldwide.
ICM Research interviewed a random sample of 2021 adults aged 18+ by telephone between 16 and 21 April 2005. Interviews were conducted across the country and the results have been weighted to the profile of all adults. ICM is a member of the British Polling Council and abides by its rules. Further information at www.icmresearch.co.uk/
* £192 invested each month in shares that make up the FTSE All share index with net income reinvested from 1987-date would now be worth £54,760.25. Source: FactSet Research Systems
** The National Union of Students has estimated that a student can expect to pay £25,572 for living expenses and tuition fees for a 3 year course outside London. Assuming inflation over the next 18 years of 2.5 per cent per annum, this might then cost £39,884.
The information contained in this press release is believed to be correct but cannot be guaranteed. Investors should be aware that the value of investments and the income derived from them can fall as well as rise, and past performance is no guide to future performance. The information contained in this press release does not constitute a personal recommendation. You should contact a personal adviser to discuss the suitability of these recommendations to your personal circumstances and investment objectives.
About Barclays
Barclays PLC is one of the world’s largest global financial services providers primarily offering banking, investment banking and investment management services. Present in over 60 countries, Barclays is a leading provider of global services to over 20 million customers and employs more than 78,400 people worldwide.
With over 300 years of history and expertise in banking, Barclays Plc has six major divisions:
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UK Banking, delivers banking products and services to over 14 million personal customers and 745, 000 businesses in the UK.
Barclaycard, is one of the largest global credit card companies with 13.4 million credit card customers around the world.
Barclays Capital, is a leading global investment bank which provides large corporate, institutional and government clients with solutions to their financing and risk management needs.
Barclays Global Investors, one of the world’s largest asset managers and a leading provider of investment management products and services.
Private Clients, Barclays wealth management operation which has over £77 billion of customer funds under management and 375,000 affluent and high net worth clients.
International Retail and Commercial Banking provides a range of banking services, including current accounts, savings, investments, mortgages and consumer loans to personal and corporate customers across Spain, Portugal, France, Italy, Africa and the Middle East.
