One of the goals we see from our clients is the desire to help younger generations out financially. Before the start of the Covid-19 pandemic, nearly a quarter of people prioritised the provision of financial support for younger generations. New research has shown that a third of people now view this Financial Planning goal as a priority.
The survey, from Hodge Bank, found that the Covid-19 pandemic has resulted in more people wanting to help their children and grandchildren. They found that 31% of those questioned said giving a financial gift to the younger generations is more important to them since the Covid-19 outbreak. Before the pandemic, 23% said it was a priority.
Despite the economic impact of the pandemic, it appears that the ‘Bank of Mum and Dad’ is still open for business.
The research found that parents are responsible for 72% of all financial gifts, but these gifts to the next generation can come from all parts of the family, including children and siblings.
The survey also found that a third of people have received a financial gift from family, with 25 to 34-year-olds most likely to be on the receiving end of a family financial gift.
The most popular reason for gifting money to family was a special occasion; a quarter of financial gifts were given for weddings and birthdays, with 11% of gifts to help with big purchases, including cars and houses. Almost one in five have received a gift to help them with their day-to-day finances, and 14% used the financial gift to pay off debt.
Emma Graham, Business Development Director at Hodge, said of the research:
“Our study showed that, as a nation, we all want to help our family out when it comes to money. And whilst we all think of the Bank of Mum and Dad or Gran and Grandad as a traditional source, we were surprised to see that 14% of brothers and sisters are also helping out.”
Elsewhere in the study, 40% of those receiving gifts said they expect to pay their parents back, but this intention fell to 28% when the gift came from grandparents. When speaking to the donor, 26% said they expected to be paid back, but only 15% of grandparents thought their money would be repaid.
“It’s clear that families feel strongly about offering financial support to each other if they are able and this has increased since the Covid pandemic. Before Covid, 23% of people prioritised helping their families out financially in the next five years. Since the Covid-19 outbreak that has increased to a third of people saying helping a family member financially had become more important.
“So, it is clear that the Covid-19 lockdown and subsequent predicted economic downturn, has led to more families looking to share wealth to help younger children or grandchildren during this difficult time.”