If you can afford it, financial support from grandparents can help give youngsters a real head-start
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Summer school holidays can be a busy time for grandparents, with two-fifths (42%) saying they’ve been lined up to provide free childcare, according to a survey by Lloyds Bank.
It can also be an expensive time. A quarter (26%) have been, or are currently funding activities over the summer while kids are under their watch, the research also found.
“Grandparents are summer holiday saviours, bridging the gap between annual leave and the never-ending school holiday,” says Sarah Coles, a personal finance analyst at Hargreaves Lansdown.
And this is just the tip of the iceberg for many, with lots of grandparents also helping out younger generations with university costs or getting on the housing ladder, or dipping into their bank accounts when kids need something new.
Of course, if you have the means to do so, being able to help your grandchildren financially is possibly something you’re keen to do – but it’s a good idea to think about the most sensible ways of going about it, and balancing generosity with helpful life-lessons too.
Here are 10 tips from Hargreaves Lansdown for how grandparents can help to transform their grandchildren’s lives financially…
1. Teach them about money early
Grandparents have the freedom and space to plan the sorts of handy money lessons that harassed parents may not have time for. Everything from simple money games to Monopoly marathons can get them used to the idea of money, while shopping trips with a budget can help them learn to prioritise. Grandparents taught their own children about money – Hargreaves Lansdown says two-thirds of people learned about financial issues from their parents – so they already have plenty of experience.
2. Kick-start good habits
You can give them their first money box and talk to them about saving up. Check their savings account statements regularly with them, so they can see the impact on a regular basis.
6. Help them budget
As grandchildren get older, give them greater responsibility to fend for themselves. Advance money which involves them setting a budget for several items.
9. Pay into a Junior Sipp (self-invested personal pension)
It can seem bizarre to consider their retirement when they’re still in nappies, but saving for their first 18 years can give them a vital head-start. If you paid in £40/AED179.01 a month from birth-18, they could end up with over £70,000/AED313,270.98 in their pension at the age of 60, based on typical investment growth rates. But remember that investments can go down in value as well as up.
10. Consider leaving them a lump sum in your will
They will remember this fondly and it could make a real difference to getting them onto the housing ladder or just giving them a good start in life.