Caring for children or grandchildren can be an incredibly rewarding experience, offering a unique opportunity to watch them grow and learn. But this support often extends beyond simply spending time with young loved ones, especially if you’re a grandparent.
The cost of living crisis has increased the financial pressures on parents. The Independent recently revealed that more than half (57%) of parents with children under 13 rely on childcare support from at least one grandparent.
Rising prices have also seen some parents increase the pocket money they give. The Independent finds that 54% of parents who give pocket money have upped the amount in light of rising costs.
While you may enjoy caring for your children and grandchildren, it’s essential to remember that your time and energy are valuable resources – providing childcare can have financial implications, too.
Continue reading to discover three ways to support younger loved ones without affecting your financial plans.
1. Teach them some simple budgeting techniques
Pocket money isn’t simply a way to provide an allowance to your children or grandchildren – it can also be a powerful tool for teaching them financial literacy.
The Independent article above states that the average weekly amount of pocket money children receive is around £9.33.
While this might seem small, it still offers an invaluable opportunity to discuss the importance of saving, spending wisely, and budgeting.
If you’re one of the 76% of parents who provides pocket money for your child, you may want to sit down with them and discuss what they can afford to purchase. And how to keep track of their weekly or monthly spending.
Ensure your children or grandchildren understand the concept of prioritising certain expenses and the difference between “needs” and “wants”. This will help equip them with the skills they need to manage their wealth later in life.
Another way to do this is by including them in conversations about your own budget. This could help them grasp the real-world implications of any financial decisions they make.
You might even allow them to control the budget for a long-awaited day out. They’ll have to pay for tickets, snacks, and any souvenirs they wish to purchase, illustrating how far their money will stretch and the importance of budgeting.
Beyond helping them develop essential life skills, teaching your child or grandchild about budgeting can indirectly benefit you. As they become more financially independent, they might be less likely to rely on you for financial support in the future.
2. Build them a nest egg without affecting your standard of living
A more tangible way to support your younger loved ones is by building a nest egg for their future.
Doing so could provide them with a financial foundation to achieve their goals and aspirations later in life without a reliance on your wealth.
Creating a joint savings plan could be a practical and rewarding approach. By working together with your child or grandchild, you can set clear goals and track your progress. Even small, consistent contributions now could accumulate considerably over time.
You might consider a Junior ISA (JISA). These offer a tax-efficient way to save for a child’s future.
JISAs have an annual subscription limit of £9,000 as of 2024/25. You (and any other parties contributing on your child’s behalf) can contribute up to this amount. You can choose between:
- A Cash JISA, which operates similarly to a traditional savings account but with tax-free interest
- A Stocks and Shares JISA, which allows you to invest in securities on a child’s behalf, with any gains made free of both Income Tax and Capital Gains Tax.
While investments have the potential for greater returns, they also carry more risk. It’s essential to assess your risk tolerance and choose the option that best suits your and your younger loved one’s financial objectives.
Whatever financial help you choose to give, remember that while supporting your children or grandchildren is admirable, it’s crucial to prioritise your own financial wellbeing. Giving more than you can realistically afford could hamper your progress towards your long-term goals.
At HA&W, we can use cashflow modelling to examine your income and savings, factoring in any potential future expenses. This invaluable analysis can help determine what you can afford to give without harming your own security.
3. Communicate your expectations clearly
Open and honest communication is essential when discussing financial matters with your children or grandchildren. Clearly outlining your financial situation and any expectations you have can prevent misunderstandings and disappointments further down the line.
It’s perfectly acceptable to say “no” to specific requests. In fact, setting clear boundaries is crucial for maintaining healthy relationships and mitigating resentment.
While you’re at it, you might want to offer alternatives and compromises, too. This demonstrates your willingness to support them while maintaining your own financial security.
Talking about money with loved ones can be hard. Klarna found that a fifth of UK adults (21%) have never discussed money with a friend or family member.
But financial advice can help. At HA&W, our expert team can provide invaluable guidance, helping you to create a sustainable plan that balances your own needs and financial security with your desire to support your loved one.
Get in touch
If you’d like some clarity and guidance regarding your family’s financial future, get in touch. Contact us now to find out how our Chartered financial planners could help you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
