Grandparents save more than £2 billion a year to help grandchildren

British grandparents are digging deep to help their children and grandchildren by contributing billions of pounds every year towards long-term savings and everyday family costs, according to the latest research from J.P. Morgan Asset Management (JPMAM).

The research polled more than 1,000 of the nation's grandparents on all the ways they help their families financially. It found two-fifths of grandparents (42%) are saving for their grandchildren's future, and during the last year have put away an average of £154 each - or £2.4 billion collectively - with a savings account being the most popular way to save.  Of those who aren't saving for their grandchildren, more than half (55%) say it's because they simply can't afford it, while one in six say that parents or other family members are already taking care of this, and one in ten say they just don't want to.
 
The JPMAM research also found many grandparents are contributing financially to the day-to-day costs of raising children - to the tune of £257 each a year, or more than £4 billion collectively.  Just over a third (36%) help buy clothes and school uniforms, 29% pay for shoes (including school shoes), and 16% help cover the cost of school trips. One in eight (12%) are also paying for, or towards, improvements for the family home.
 
Grandparents are also generous with their time. Over a third (36%) of those who say they look after their grandchildren for free do so for more than 10 hours during an average week. Those who don't provide care for their grandchildren put it mainly down to distance: two-thirds (67%) admit they can't help because they don't live near enough, while one in 10 say they don't have time because of work and other commitments.
 
Keith Evins, Head of UK Funds Marketing at J. P. Morgan Asset Management, said: "Bringing up a family while making ends meet is certainly no mean feat. Fortunately, the nation's grandparents are helping their families financially and with their time, too. As parents and grandparents it's important we do as much as possible to lay a good financial foundation for our families, so it's encouraging to see generations rallying round each other with support."
 
The JPMAM research also polled grandparents on the ways they have contributed financially to the lives of their grown-up children. Just over a third of grandparents (36%) say they help out with everyday living costs, and a fifth (19%) have helped with a deposit for a home. Grandparents also assist with the cost of a wedding (32%), buying a car (31%), and with the cost of holidays (28%).  Furthermore, 5% help their grown-up children with their monthly mortgage payments. But while two-thirds of grandparents (64%) wouldn't ask their grown-up children for the money back, a quarter say that they would; 8% have agreed to repayment terms, and 5% have already asked for the cash back.
 
In further research, JPMAM also polled parents on their views on accepting financial help from their own parents. Half say they have accepted financial help, and a tenth of those (11%) admit they couldn't survive without it.
 
Evins added: "It's fantastic that grandparents are able to provide such a level of both practical and financial help with their grandchildren, and indeed their own grown-up children. More than £2 billion a year in savings for their grandchildren's future is a really significant figure. However, the fact that the majority of this money is going into bank and building society accounts suggests grandparents could be missing a more productive approach. Investing for children can be a great opportunity to take advantage of a long-term time horizon, and in these times of low interest rates, grandparents might want to consider the greater growth potential of the stockmarket. While the value of shares can fall as well as rise, a longer investment term can give the opportunity to ride out market volatility."
 
J.P. Morgan Asset Management offers a broad range of funds and investment trusts investing in stock markets worldwide, which can be bought through a financial adviser, directly or through a platform. J.P. Morgan Asset Management offers a stocks and shares Junior ISA, allowing up to £3,720 a year to be invested free of tax for children born before September 2002 or after January 2011. While a Junior ISA can only be opened by a parent or guardian, grandparents are able to contribute to accounts once set up. The J.P. Morgan Junior ISA is available from £50 a month.
 
"By starting to save £50 per month, you could build a Junior ISA savings pot of more than £4,000 in five years," said Evins.
 
Currently, children born during the Child Trust Fund (CTF) regime between September 2002 and the end of 2010 are not eligible to hold a Junior ISA. However, the Government consultation on the future of CTF accounts closes in early August, and may provide an opportunity for these children to access the additional flexibility of a Junior ISA in the future.