Parents Bailing Out Adult Children
An average of 7.5 million parents given an average of £2,540 to their adult children to help 'bail them out', according to a MoneyExpert.com poll of 2,511 UK adult. Thirteen percent of UK parents gave their children between £5,000 and £20,000. This money is used to buy a car or pay off credit card debts, pay off overdrafts, pay off student loans, and make mortgage payments. Parents in the Midlands are most likely to help their adult children whilst those in Scotland are the least likely to help.
"Having a child is an expensive business and unfortunately spending on your kids doesn't stop once they reach adulthood," said Sean Gardner, chief executive of MoneyExpert.
"With the cost of living so high at the moment and with so many people living a buy-now-pay-later lifestyle, parents are often forced to help out their children financially in later life. Whether it's an overdue credit card bill, an unauthorised overdraft or even a missed mortgage repayment, millions of parents are forking out on behalf of their children."
Parents are not the only ones helping the younger generations, 31 percent of grandparents put money aside for grandchildren. One quarter of these put away money to fund their grandchild's education. One in six save money to help grandchildren buy their first property.
However, many experts believe this is detrimental to both the parent's and children's finances.
"If you look at the research as noted in the book 'The Millionaire Next Door,' parents who feel compelled to financially support their children do more harm than good," contends psychologist Gary Buffone, author of "Choking on the Silver Spoon: Keeping Your Kids Healthy, Wealthy and Wise in a Land of Plenty."
"Typically, the more dollars adult children receive, the fewer they accumulate, while those who are given fewer dollars accumulate more."
Published on January 18, 2008
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