Article written by Kellands Hale, our preferred independent advice firm.
This article is not intended to be financial advice to any individual. The views expressed are those of the author and Moneyfacts.co.uk does not endorse the content.
The cost of living crisis has dominated the news in 2022, affecting many different areas of our lives. Rising prices have caused some families to stress about their finances – with some already discussing strategies with their financial planner to cope.
What you may not have considered, though, is how the cost of living crisis could affect your children. Their age, in this instance, is irrelevant as increasing costs could impact your children’s opportunities now and in the future.
In fact, one in seven over-50s have already altered their inheritance plans to help their children manage the cost of living crisis, according to Saga Equity Release, a lifetime mortgage provider.
The following article will look at three different ways your children might be affected by these tumultuous times, and how your Kellands financial planner can help.
“All but the super-rich are being priced out of an elite education system.”
This is the line which led into a story from The Times, which found that private school fees have increased by approximately 6%, putting the average price of boarding school at almost £50,000 a year.
While, of course, your children are not paying their school fees themselves, you could find that you are in a less viable position to afford these increases this year and beyond.
What’s more, the cost of living while studying at university may increase in line with the overall rate of inflation. Not only has the Bank of England (BoE) raised successive base rates, but interest on student loan repayments is set to rise from 4.5% to 7.3% in September.
This means your children, who may be emerging into graduate roles, could see their student loan repayments increase this year – on top of the everyday price rises the UK is experiencing.
In these instances, it could be wise to discuss readjusting your wealth plans with your Kellands financial planner, in order to accommodate the rising price of education and continue to provide your children with the opportunities they have enjoyed thus far.
As you may already know, the UK’s average house prices are continuing to climb. In the year to April, the average house price rose by £31,000, more than what most people earn in the same period.
If you hope to provide your adult children with financial help to get onto the property ladder this year, it could be that your gift does not reach as far as you had hoped.
In this instance, it may be that you decide to gift additional funds to make up the difference – or, on the other hand, you might require that your children save a little longer for the home they want.
In either case, openly discussing how the cost of living crisis may affect your children’s homebuying opportunities may be wise. Your Kellands financial planner can mediate these conversations among the family, helping to resolve any financial concerns and achieve the best possible outcome.
The old adage of “paying your dues” still rings true in today’s world. If your children are entering the world of work, it may be that they are starting at the very bottom of the ladder.
While working hard for little money is often a rite of passage for bright-eyed young workers, it could also be somewhat challenging during the cost of living crisis. With inflation standing at 9.1% as of June 2022, your adult children may struggle to make ends meet as they begin their career.
Whether they are working for free as an intern, or earning a low wage, you may choose to provide your children with additional financial support while they weather the storms of early working life.
Or, if your children are making their own way in the world, they may not be able to save money as efficiently as they had hoped – meaning other milestones, like buying a home, could take longer to achieve.
No matter what stage of life your children are at, it seems inevitable that the cost of living crisis may affect their opportunities. Even in this short-term period of volatility, it could be worth considering a shift in your financial plans.
Your Kellands financial planner can help you re-evaluate your inheritance strategy, for example, enabling you to do more “giving while living” to help your children shoulder rising costs.
In addition, we can meet your young adult children to discuss their financial goals, giving them the confidence and know-how they need to succeed, even during a time of high inflation.
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