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No end date for Bank of Mum and Dad

No end date for Bank of Mum and Dad

Category: Money

Updated: 30/11/2011
First Published: 30/11/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The days when the bank of Mum and Dad closed for business once their children reached the age of 18 have all but disappeared.

With university fees soaring, the cost of living going up and home ownership as expensive as ever, just one in five parents think they will be able to withdraw their financial support for their children when they reach the landmark age of 18.

At the other end of the spectrum, more than a quarter (27%) of parents think they will never stop providing financial help to their children, figures from Legal & General show.

It is also clear that parents are not the only stakeholders expected to fund a child's financial future.

The majority of parents are relying on their own parents for financial support for their adult children. More than 65% believe contributions to their child's ISA will come direct from grandparents.

In addition, almost one in six (16%) parents expects to make lump sum payments into their children's savings via inheritance.

"The cost of living is going up and the cost of raising a child is going up with it. However, it is still shocking to find that 27% of parents never expect their children to be financially independent," said Simon Ellis, managing director, Legal & General Investments.

"With first time buyers requiring large deposits and university fees set to reach almost £10,000 a year, bankrolling your children after their 18th birthdays is becoming a norm for many parents.

"This trend significantly increases the strain on parental finances and will no doubt change the way future parents save for their children.

"Understandably, all parents want to give their children the best possible start and offer them both choice and opportunity during their adult years."

Figures show that parents do not have to put masses of cash aside each month to save up a fair sized lump sum for when their children reach 18.

Based on an annual return of 5%, parents putting aside just more than £40 a month for 18 years could create a pot worth £14,700.

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.