The rise of expensive payday loans, supported by frequent Internet and daytime television advertising, is a symptom of tough economic times and a more relaxed attitude towards long-term Financial Planning.
New research from MoneySupermarket.com has found that over 1.7 million grandparents and parents are being pushed into debt by so-called ‘greyday loans’; the financial assistance they have provided to children and grandchildren.
A quarter of grandparents who provided financial support for adult grandchildren had to use their savings. Another 14% borrowed on a credit card to provide this financial support and 14% used an overdraft.
As a result of these greyday loans, 33% of grandparents have not been able to save as much as they intended and 18% still have outstanding debts they cannot repay.
Managing finances and avoiding debt in retirement is even more important than it is pre-retirement, with limited opportunities to rebuild savings or repay borrowing.
Financial assistance for children and grandchildren is something that those entering retirement should be building into their Financial Planning.
Whilst it can sometimes be difficult to predict what financial assistance might be required, establishing an emergency fund for helping other family members is one way to set aside the necessary financial resources for this purpose.
By working with a Financial Planner, grandparents can better understand the impact of providing financial assistance on their own financial planning and can select the most suitable resources for providing this help.
Providing ‘greyday loans’ is for some an important part of being a grandparent. Ensuring that this does not result in financial difficulty in later life is equally as important.
Photo credit: Flickr/ryanrocketship
