Bank of Mum and Dad pays out £13,000 a year

Family with piggy bank

Parents are giving away an average of £12,846 a year to other family members, according to a new report from Scottish Widows.

The money is being given or loaned out by parents and the figure has increased by 31% in the past five years.

Most of this money is being given to children, with one in three parents giving more than £10,000 to their children to help with living expenses, paying off debts and buying a first home.

No savings

This trend of lending is having a detrimental effect on individual savings and one in four parents with children under 16 now have no savings to fall back on, while 37% are not putting any away.

Of those parents who do have some savings, the average pot sits at less than £2,500 and 28% say they would not be able to last one month on this if they were out of work.

The report found that people in their late 30s, people who are divorced and those with children under 16 are the most financially at risk groups in the UK.

A lack of saving means many families are cutting back on other areas of spending and more than half of those aged 35 to 44 said they couldn’t afford to go on holiday, while 32% perceive owning a home as a luxury.

"We can see that family giving has risen exponentially, but this is clearly unsustainable. It begs the question, that without taking steps to provide, how will they help their children in another five years through education or onto the property ladder?" says Iain McGowan, head of savings and investments at Scottish Widows.

"We are increasingly seeing people fail to plan properly for the future," he adds.

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