Cash Q&A: How do I help relatives and save for retirement?

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I AM nearing retirement age and with my grandchildren going to university, my wife and I are finding that we are having to dip into our savings to help out our extended family members.

This leaves me concerned about how we’re going to manage our finances in the long term. Am I the only one finding myself in this situation? And how can I help my children and other family members plan their finances better?

NP, Edinburgh

IN THE current financial climate it’s no surprise that more and more families are finding they are in the same position as you, digging into their pockets to help relatives meet their financial needs.

Families are now pulling together to support each other, with grandparents helping their grand children, children lending money to parents, and siblings are also supporting each other. Therefore, you are far from alone in your generosity.

Recent research by Scottish Widows suggested that grandparents who have lent money to their grandchildren have given them an average of £3,665. Families are helping to share the financial burden and grandparents who may have savings should try to encourage their children to plan for the future by using a simple income and expenditure plan.

This is something your children can start using today – a kind of self help guide, if you like. It will detail their finances, make them aware of what their priority debt is, what they need to pay in the short term and what their long-term commitments are. Also, having savings as a cushion against rainy days, such as redundancy, or even setting up a bank account for a grandchild’s birthday will make you feel better about the future.

A budgeting tool can help if you are finding yourself overspending through exceptional circumstances. There are three easy steps:

1) Prioritise your or your family’s debt into emergency, priority and non-priority. Emergency debt is everyday expenses and mortgage payments that your family must deal with immediately. Priority debt is secured loans, telephone and utility bills. Non-priority debt is store cards, credit cards and loans or repayments of loans to family members

2) Work out an income and expenditure plan and assess your monthly disposable income and whether you can set any savings aside for the longer term

3) If you are worried about meeting your financial commitments, try to start making changes to your lifestyle – see if you can reduce your credit card spending, for example, or switch to lower interest rates.

As a grandparent, you may understandably feel that you want to hold onto what you have built up over the years. But ask yourself if there is any point in holding onto investments or even assets that you planned to pass on to your children at a later stage, if they are suffering financial discomfort now. Instead of thinking that your are losing the benefit of your savings, perhaps you could consider downsizing, if your children have moved out.

Whatever you choose, don’t get yourself into financial difficulty by helping someone else to alleviate their money worries.

• Maureen Leslie is a director at MLM Solutions

• If you have a question you need answered, write to Jeff Salway c/o The Scotsman, 108 Holyrood Road, Edinburgh EH8 8AS or email: