'Savings sap' could lead to parents needing debt management advice
'Savings sap' could lead to parents needing debt management advice
Friday 5th March 2010
New research from Scottish Widows reveals that adult children are continuing to "sap" their parents savings, with the average amount handed out increasing from £11,800 last year to £13,660.
Almost half (47 per cent) of parents with adult children have given or loaned them money, with one in ten increasing their levels of debt, including mortgaging or remortgaging their property, in order to do so.
Some 35 per cent of young adults are using their parents' money to fund daily living costs, while 38 per cent need the money to pay off debt, states the study.
Savings expert at Scottish Widows Iain McGowan said the figures highlight the domino effect of the recession.
"On the one hand, generation Y is looking ever more to its parents for help as it struggles to get jobs, credit and mortgages - and to clear debt," he said.
"At the same time, the bank of mum and dad is not as readily available as it once was, often for the same reasons. This means that fewer parents can afford to give or loan money, while those who can are being asked to provide more."
This was a worrying position for parents to be in, said Mr McGowan, as it can affect retirement plans meaning they may have to work longer.
Some 22 per cent of parents who are handing money over to their children have had to cut back on daily spending, 31 per cent are saving less and 12 per cent have stopped saving altogether, the report states.
What is more, if parents were not channeling money towards their adult children, 32 per cent would have been likely to save it toward their retirement.
News article brought to you by Debt1 - UK Debt Management Specialists
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