The cost-of-living crisis may already be affecting your finances – and it could affect your children too. Read about how to protect your kids from rising costs.
The cost-of-living crisis has dominated the news in 2022, affecting many different areas of our lives. Rising prices have caused some families to become stressed about their finances – indeed, you may already have begun discussing strategies for coping with the high cost of living with your financial planner.
What you may not have considered, though, is how the cost of living crisis could affect your children. At any age, increasing costs could have an impact on your children’s opportunities now and in the future.
In fact, according to the Telegraph , one in seven over-50s have already altered their inheritance plans in order to gift money to adult children early, due to the high cost of living.
If you want to support your children through these tumultuous times, read on to find out three ways your children might be affected and how your Kellands financial planner can help.
3 ways your children might be affected by the cost of living crisis
1. An increase in educational fees
Even if your children are not yet adults, the cost of living crisis could already be affecting them.
Indeed, private school fees have increased by approximately 6% according to a Times report, which further claims that the average boarding school fee is approaching £50,000 a year.
While, of course, your children are not paying their school fees themselves, you could find that you are in a less viable position to afford these increases this year and beyond.
In this instance, it could be wise to discuss readjusting your wealth plans with your Kellands financial planner, in order to accommodate the rising price of education and continue to provide your children with the opportunities they have enjoyed so far.
What’s more, if your children are of university age, or have recently graduated, the cost of living while studying at university may increase in line with the overall rate of inflation.
In addition, interest rates are rising; the Bank of England (BoE) raised the base rate to 1% in May 2022. Along with the base rate, according to Money Saving Expert, interest on student loan repayments is set to rise from 4.5% to 7.3% in September 2022. This means your children, who may be emerging into graduate roles, could see their student loan repayments increase this year – on top of the everyday price rises the UK is experiencing.
Once again, if you are helping your children shoulder educational costs as they enter adulthood, it could be constructive to meet with your financial planner. Together, you can discuss the effects of the cost of living crisis on both your own financial viability, and that of your adult children.
2. Buying their first home
As you may already know, the UK’s average house prices are continuing to climb. iNews reports that, in May 2022 alone, the average asking price of a UK home rose by £7,400.
If you have committed to providing financial help to your adult children who are hoping to get onto the property ladder this year, it could be that your gift does not reach as far as you had hoped.
In this instance, it may be that you decide to gift additional funds to make up the difference – or, on the other hand, you might require that your children save a little longer for the home they want.
In either case, openly discussing how the cost of living crisis may affect your children’s homebuying opportunities may be wise. Your Kellands financial planner can mediate these conversations among the family, helping to resolve any financial concerns and achieve the best possible outcome.
3. Starting their career in low-paid roles
The old adage of “paying your dues” still rings true in today’s world. If your children are entering the world of work, it may be that they are starting at the very bottom of the ladder.
While working hard for little money is often a rite of passage for bright-eyed young workers, it could also be somewhat challenging during the cost of living crisis. With inflation standing at 9% as of May 2022, your adult children may struggle to make ends meet as they begin their career.
Whether they are working for free as an intern, or earning a low wage, you may choose to provide your children with additional financial support while they weather the storms of early working life.
Or, if your children are making their own way in the world, they may not be able to save money as efficiently as they had hoped – meaning other milestones, like buying a home, could take longer to achieve.
Your Kellands financial planner can help you alter your financial strategy to support your children
No matter what stage of life your children are at, it seems inevitable that the cost of living crisis may affect their opportunities in life. Even in this short-term period of volatility, it could be worth considering a shift in your financial plans.
Your Kellands financial planner can help you re-evaluate your inheritance strategy, for example, enabling you to do more “giving while living” to help your children shoulder rising costs.
In addition, we can meet with your young adult children to discuss their financial goals, giving them the confidence and know-how they need to succeed, even during a time of high inflation.
Get in touch
For unparalleled financial guidance you can trust, email us at email@example.com, or call 0161 929 8838.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.