Bank of Mum & Dad needs £2.75billion bailout

Parents have had to raid children's savings to the tune of £2.75billion to date to support the family since Covid-19 struck the UK.

While the Bank of Mum and Dad is normally one of the UK's largest lenders, new research  by Direct Line suggests that it has needed a bailout from the Bank of Son and Daughter as the impact of reduced salaries (15%) and unexpected unemployment (12%) leads many parents to try and find income elsewhere.

Nearly eight million parents (23%) have had to dip into their youngsters' money since lockdown began. On average, each family has so far needed around £700 from their children's savings - which equates to a total sum across the UK of nearly £17million for every day of lockdown.

More to come

Unfortunately, the lasting impact of the pandemic means families expect to take even more from their children's savings in the future.

Families predict needing to withdraw a typical £862 from their children, which equates to a total of £3.4billion to help keep them afloat during these difficult economic times.

Day-to-day living costs are the driver behind parents needing to access their child's savings, with nearly a third doing so to pay for food costs and a similar number using the money for utility bills and to help cover childcare.

One in eight have struggled to pay their mortgage or rent, or keep up with debt repayments. The impact of coronavirus on children's savings could be profound - as not only have parents had to use existing nest eggs, but many have also had to stop their regular payments.

Rebuilding a savings plan

Allan Gardner, Financial Services Director at Aberdein Considine, said: "The impact of the Coronavirus pandemic has been severe and unfortunately means many families are facing tough financial decision to cope on a lower income.

"Although children don't usually have income of their own, what they do have is time on their side.