Generous grandparents spend over £6k on each child
As parents begin to feel the pinch of Government cuts, new research from M&S Money reveals that grandparents in the UK are providing more than £6000 of support to grandchildren. Over the first 18 years of each grandchild’s life, grandparents gift on average £6165 in either money or presents.
Children born after 1st January 2011 will no longer receive a £250 Child Trust Fund voucher from the Government, and some families will also be hit by the plans to cut higher rate taxpayers' child benefit from April 2012. But despite these losses to household income, M&S Money research reveals that grandparents actually contribute more than the outgoing Child Trust Fund voucher, spending around £315 on each grandchild in their first year. Each year, they also spend an average of £257 on additional items and £68 on birthday and Christmas presents.
More than one in five grandparents (22%) spends over £50 on Christmas presents for each grandchild and 11% spend more than £50 on each birthday gift.
Despite the recent squeeze on pensioner income, one in five (20%) grandparents say they actually spend more on their grandchildren than they did on their own children.
When it comes to financial gifts, 28% of grandparents said they give their grandchildren savings for use when they are older. A further one in ten (10%) gives their grandchild regular pocket money. Older grandparents are also more likely to give money than an actual gift. Over half (58%) of 71-75 year olds said they preferred giving money so their grandchild could buy what he or she wanted compared to only 22% of 50-55 year olds.
Colin Kersley, Chief Executive of M&S Money, said:
“With planned benefit cuts likely to affect families across the UK, it is reassuring to see additional support being provided by doting grandparents. Whether this is in the form of gifts or money, grandparents are proving a significant boost to family finances.
“Although giving an actual present is more popular than giving money, grandparents may want to consider what is likely to be most valuable over the long term. Recent research by M&S Money showed that the average cost of training for one of the top ten most popular careers is an eye-watering £24,686 for boys or £31,049 for girls. Therefore money put into savings when a grandchild is born and then topped up over the course of their childhood would provide a welcome nest egg as they reach adulthood.”
Other Key Findings
Unsurprisingly, grandparents with fewer grandchildren are able to be more generous when it comes to both Christmas and birthday gifts. Those with only one grandchild spend £38 on average on birthday gifts whereas those with 4 or 5 grandchildren spend £29 per grandchild. At Christmas, those with only one grandchild spend £11 more per grandchild than those with 5 grandchildren (£48 compared to £37).
The M&S Money research also shows that grandmothers and grandfathers tend to pay for different types of items for their grandchildren. Grandmothers spend more on clothes (£53 vs. £40), toys (£49 vs. £43) and treats such as theme parks (£19 vs. £17) whereas grandfathers spend more on holidays (£40 vs. £38), holiday pocket money (£29 vs. £22) and regular pocket money (£19 vs. £17).
In the first year of their grandchild’s life, grandmothers spend more than grandfathers on all items except car seats where they both spend the same (£24). This might suggest that men prefer to leave the purchase of items such as newborn clothes, prams and cots to grandmothers but are comfortable buying practical items such as car seats.