Bank of mum and dad may find its reserves drained within five years

THE amount Scots lend to children and grandchildren has risen to more than £12,000 in the past five years, new research has found.

But the study identified a “risk triangle” of people in their late thirties, those who are divorced or have children under 16, who bear the brunt of family responsibilities and cannot save enough to be able to lend to the younger generations in the future.

Scots lend an average of £12,186 to their children and/or grandchildren, just under £700 less than the UK average of £12,846.

Across the UK, the amount of family lending has risen by 31 per cent in the past five years and Scotland is said to have seen a similar rise, though an exact figure was not available.

The Scottish Widows study found that across the UK, a quarter of parents with children under 16 had no savings at all and 37 per cent were not currently saving.

A quarter of those aged 35-44 had no savings at all, with 73 per cent of them saying they had no money available to save.

More than a third (39 per cent) of people who are divorced and living alone were currently failing to save anything at all.

Iain McGowan, head of savings and investments at Scottish Widows, said: “Although these groups aren’t mutually exclusive, what we can discern from the research is that all the points in this ‘risk triangle’ have significant family responsibilities.

“We can see that family giving has risen exponentially, but this is clearly unsustainable. It begs the question, that without taking steps to provide, how will they help their children in another five years through education or on to the property ladder?”

The Scottish Widows Savings and Investments Report 2012 found that almost a third of UK parents with young children (28 per cent) said that the value of their savings and investments came to under £2,500, while a quarter had nothing saved at all.

The study also suggested that those north of the Border were struggling to pay for treats such as holidays and family days out.

Nearly half of Scots (47 per cent) said that taking one holiday a year was an extra cost they could ill-afford, while almost half (45 per cent) said family days out were also a luxury.

Almost a quarter (23 per cent) called home ownership a luxury.

The report also identified a trend of saving for the short term. It found that half of Scots were saving for the short-term or not at all.

Two in five long-term savers in Scotland (44 per cent) viewed “long-term” as the period of six to ten years, and only a quarter of Scots adults believed they were saving enough for their long-term needs.

Mr McGowan said: “We are increasingly seeing people fail to plan properly for the future.

“When a life stage – whether having children, buying a home or planning for retirement – is so far away, we tend to not take it into account, preferring to focus on the here and now instead.

“However, not only is this misguided, this short-sightedness will cost the current generation dearly, and deliver a huge shock further down the line.”

The study found slightly more people in the UK were saving in some capacity – 68 per cent in 2012, up from 64 per cent in 2011. The average amount saved in 2011 was £2,399, an increase of £365 from 2010.