Cash quarrels put pressure on families

The state of the economy is putting a strain on families as Brits are increasingly becoming financially indebted to their nearest and dearest.

According to fresh research from Skipton Building Society, Britons are currently owed over £251 billion by their family – an increase of 82%1 on the £14 billion they were owed 10 years ago. Unsurprisingly, this financial debt is having an adverse affect on relationships with nearly one in five (17%) falling out with loved ones as a result.

Borrowing large sums of money from those close to you is quite common – half (51%) of Brits have given a hand-out to a member of their family during the last 10 years with 11% of these lending over £5,000 and 4% over £10,000 as a single payment.

And while it’s often parents financially supporting their offspring - with 47% lending the largest single amount of money during the last 10 years to their son or daughter - the tables are turning for many grown-up children with more than one in 10 (12%) lending funds to their mum and dad.

Coming to the rescue of their parents, a third (31%) of children who have lent money are paying off bills their mums and dads have accumulated, with 8% shelling out for household repairs. The cash is also being used for investment purposes, with 5% lending their parents money to purchase a property and 7% to buy a car.

However, loaning money to family members does make people feel they should have a say in how it is spent – and how it shouldn’t be spent. One in 20 (6%) said they felt disheartened as they believed their money had been used unwisely.

Feeling as though their relatives have taken advantage of them, nearly one in 10 (7%) said they felt it took too long for them to get the money back with 7% reporting that their family had made no attempt to repay them at all.

Brits’ generosity to their nearest and dearest is certainly causing resentment to fester. One in 10 (10%) said they felt their family took them for granted with 9% admitting they were reluctant lenders in the first place and were pressured into the loan.

Jennifer Holloway, head of media relations at Skipton Building Society, added, "It's well known that many homebuyers rely on the bank of mum and dad for help purchasing a property, but it seems getting loans from the 'financial family' is extending to other areas, such as for paying bills. This is perfectly understandable when the cost of modern living is rising all the time, but the cost of relationships that suffer as a result should also be considered.

"It's obvious that, by accumulating some savings, people could be less reliant on their families for handouts, but when you're struggling with money in the first place, that can seem daunting. However, opening a regular savings account - where you put away a little each month - is an easy way to get started. If you set up a standing order so that the cash is transferred from your bank account as soon as you're paid, you won't even notice it's gone.

"And for those who might be tempted to dip into their savings for the odd spending spree, an account with limited access would be a good choice, like Skipton's Special Saver where you can't touch your money for the first 12 months."