Grandparents supporting two generations as credit crunch bites

26 September 2008 / by Rachael Stiles
Grandparents are now not only having to support themselves, but also their children and their children's children as mortgage rates and other living costs stretch family finances.

According to research from Engage Mutual, for the past six months, 57 per cent of parents have been relying on their own parents for financial support, requiring help in meeting the expense of childcare, debt repayment, and other living costs.

As household budgets are squeezed by the rising costs of mortgage payments and soaring energy bills, engage Mutual asked grandparents how they were supporting their families throughout the credit crisis.

The financial relationships between family members have been changed by the problems facing the economy, says the family-focused financial services provider.

It found that, at a time when grandparents should be enjoying their retirement and reaping the rewards of a lifetime of hard work, many are now finding that their parental responsibilities have resurfaced.

Karl Elliott, spokesperson for Engage Mutual, commented: "With rising living costs and debt repayments taking effect, the findings show that the majority of grandparents in Great Britain have had to help their families with everyday living costs in the past six months. As our research reveals, family members turn to each other for financial support in tough economic times, leading to increasing financial interdependencies."

More than a third of grandparents have provided an average of £1,800 each to their children to assist in the repaying of debts.

The rising cost of living has driven 33 per cent of grandparents to help with paying household bills and other costs in order to help their children stave off repossession.

Childcare has prompted 28 per cent to help their children out, with more than a quarter donating an average of £454 each in the last six months.

Mr Elliott recommends that people consider putting some money aside in order to be better prepared for future ups and downs. "With costs of living increasing and tougher times ahead" he added, "it is important that people think ahead and save little and often in order to reduce the pressure to make ends meet."

Engage Mutual provides a range of investment and life solutions, such as savings accounts, Child Trust Funds and life insurance.

© Fair Investment Company Ltd