According to research commissioned by Barclays, almost a fifth (18 per cent) of British families are dependent on help from grandparents to provide for their grandchildren.
In order to give that financial help, grandparents are collectively spending more than £4 billion each year - making an annual average of £2,303 per family.
Barclays also found that more than half (58 per cent) the grandparents who are helping their families financially do so on an ad-hoc basis, with only 22 per cent taking a structured approach, and 16 per cent using planned investment.
The bank is warning that, generous as they may be, ad-hoc gifts may not be the most cost-efficient way to pay for long-term costs, such as school and university fees.
"Many grandparents are generous in giving cash gifts on an ad-hoc basis, such as for birthdays or to help cover a mortgage repayment," said Stephen Ingledew, director of Barclays Financial Planning.
"But, with an average of £2,303 being handed over by grandparents each year, British grandparents should look at other, more financially sensible options.
"For example, perhaps look at a planned investment or provide an annual gift such as a cash ISA, where grandparents can save or invest for their grandchildren whilst enjoying tax benefits."
The most popular reason for grandparents to contribute is to help with childcare costs when their grandchildren are young - 35 per cent of grandparents have contributed for this reason.
Helping their loved ones out in later years, whether helping them get onto the property ladder (23 per cent), or contributing to their university fees (31 per cent), are also frequent motives for grandparents to reach into their pockets. Click here to find out more about child investment.
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