A third of families provide financial support to their friends and relations
New research from Aviva shows that nearly a third of families provide an average of £422 a year in financial support for their family and friends, with some providing considerably more.
Former partners, children over 18, and children under 18 living outside of the family home all receive an average of more than £1,000 of financial support a year.
Changes in financial circumstances, meeting one-off expenses, dealing with living costs after unemployment and poor financial management were the top reasons for providing financial help.
With higher petrol, energy and food prices, it’s not surprising that even those who are helping their relatives and friends are finding things harder themselves.
One in seven said they have had to make cutbacks themselves so they can continue to provide assistance, and 11% said they had been less able to help as they are now struggling themselves. 10% said that they have had to provide more help in recent years than they previously did.
Savings and pensions affected
Providing financial support to family was also cited as a barrier to saving, repaying debts, saving for children and paying into a pension.
Aviva calculates that £422 over a 40-year working life amounts to £17,680 (excluding inflation and interest) which equates to two thirds of a typical pension pot (£26,940). In addition, if it were paid into a workplace scheme and matched by employer contributions, over a 40-year working life it would build up to a pension pot of £71,575.
Help with budgeting
Melanie Green, Principal Money Researcher at Which? said: ‘A change in income or increased expenses can really throw your monthly budget. If you’re struggling to make ends meet, it’s worth taking the time to examine what you’re spending and to put together a new budget.
‘I’d advise those struggling with debts to take advice from one of the free debt advice agencies, and to avoid commercial debt management companies.’