The best way to run the 'bank of mum and dad'

HAVING kids is expensive - and never more so than when they get older and parents' primary role seems to morph from giving love and care to being head of the 'bank of mum and dad'.

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Because while the financial outlay for younger children tends to centre around smaller expenses like entertainment, pocket money and birthday presents, older kids tend to want money for much bigger things, including their first car, university fees and expenses, help with getting on the property ladder, and weddings.

“The bank of mum and dad forms a crucial means of financial support for younger generations,” points out Craig Rickman, personal finance editor at the investment platform Interactive Investor.

“While any loving parent will naturally want to give their child a leg-up in life, many face a delicate balancing act, being careful not to jeopardise their own financial future in the process.”

Louise Hill, founder of GoHenry, the prepaid debit card and financial education app for young people, says: “The bank of mum and dad is a familiar part of family life, with many parents helping their children through some of their biggest milestones. Parents naturally want to give their kids the best possible start and support them where they can.”

However, she points out that 2023 research by GoHenry suggested more than half of parents (52%) planned to reduce how much they loaned or gifted to adult children, and the majority of young people said they didn’t expect support for big life events like buying a house or paying for a wedding.

“While it’s natural for parents to want to step in financially, true long-term security for kids comes from being equipped with the right financial knowledge,” says Louise.