Withdrawals from the ‘bank of mum and dad’ have hit record highs, with the average set of parents loaning or giving almost £13,000 to other members of their family, new research shows.
The phase ‘bank of mum and dad’ was originally coined as a joke but has increasingly become a reality as young people struggle to find jobs or afford the deposit on a home.
The report found that a third of UK adults with children have lent those children more than £10,000. While most of this money is lent in cash, around 6 per cent of parents have taken out loans in order to help their families.
A fifth of parents have been forced to change their lifestyles as a result of giving funds to other family members. For example, 19 per cent of people have cut back on luxuries and 18 per cent have cut back on their own day-to-day spending.
The report found that people in their late 30s, people who are divorced and people who have children under the age of 16 are the most financially vulnerable in the UK.
Scottish Widow’s report also found that people’s outlook about the economy has become gloomier in the last year. Only one in ten people expect to see an improvement in the economy over the next year, Scottish Widows found. This compares to one in six a year ago.
A separate report out today by Santander, the bank, found that the rising cost of living means that UK households are spending up to 40 per cent of their salary on basic expenses like utilities and food.
However there was one ray of light in Scottish Widows’ report. It found that people are saving more money than a year ago. The average amount saved per person in 2011 was £2,399, an increase of £365 on the year before.