Grandparents fork out £37bn to help grandchildren

The Bank of Gran and Grandad has gifted more than £37bn in funds across the nation, according to research by Saga Money.

A third of grandparents have given their grandchildren a financial boost to their, with the typical donation around £9,365 per grandchild.

More than a fifth - 23 per cent - of the cash goes on education, whilst 13 per cent is used on holidays and 12 per cent on driving lessons.

And nearly 10 per cent of the money was used by grandchildren on house deposits, to help them get a foot on the property ladder.

The generous donations look set to continue, with Saga's research showing a further third of grandparents are still considering or intending to give a financial gift and one in ten are considering lending money to grandchildren.

Grandparents say that they view the gifts as an early inheritance, with more then half saying that they would rather see their relative enjoy the money than wait to leave it as an inheritance.

Many do not specify what the money should be spent on, with four in ten happy for it to be spent on whatever their grandchildren would like to buy themselves.

Alex Edmans, head of product at Saga Money, said: “Most of the money grandparents are gifting is coming from their cash savings, so whatever small amount of interest they are missing out on is clearly outweighed by the joy they get by seeing their grandchildren benefitting from the money.

“If you are giving your grandchildren support as a loan rather than as a gift it pays to take a few sensible steps so there is no awkwardness later on.

"Only half of grandparents say they discussed repaying the loan with their grandchild, our advice is to be upfront about the conditions of the loan including how you would like the money repaid in order to avoid difficult conversations at a later date."