Springfords LLP blog

Some news, views and comments about everything and anything, relevant and irreverent.

Bankrupt of Mum and Dad

20 March 2017

A man gets held up and the robber demands all his money. “I have two children, I have no money,” he says with his hands up. The robber turns dejectedly away. It’s a popular internet meme, but we just found out: it’s true, and that’s before the running costs.

As chat-up lines go; “let’s check out the latest index from the Centre of Economic and Business Research,” is probably not going to make the evening turn out the way you may have hoped. Unless that is, you’re both economic professors, planning to be in the family way.

CEBS produce an annual report in collaboration with insurers LV=, and they’ll soon be doing it for the fourteenth time. They put the average cost of raising a child to the age of 21 at something just over £230,000, making a child more expensive than a house - even if the offspring will be ‘paid off’ four years before the mortgage.

Sadly, children aren’t generally a tax deductable expense. Just an expense.

There are ways to economise of course. Maybe buy them a Labradoodle instead of a pony, or educate them at Havant instead of Harvard. Making a broad hint to leave home is always popular, even if the old standby of wrapping lunch in a road map is a bit out of date these days.

Then, never mind the capital outlay, there are the running costs. If you think the big expenses start when the little darling gets to be taller than you, think again. Pocket money is anything but pocket change these days, and it seems to be going through the roof.

According to a recent survey by Bank of Scotland, reported on STV, lending to your children has risen hugely in the last year - going from just over £3000, to just under £4000 on average. That’s the sort of growth that most business owners would sell their children to achieve. Actually, given the subject matter, that probably wasn’t the best choice of metaphor.

Most parents, except those broody economists, probably haven’t asked when they can get a return on their investment. We admit we don’t know, but we do know what’s allowed and what’s not, if your kids decided that might actually like to earn some cash for themselves and, if you give your kids a job in the family business, just what the implications are for parents’ and offsprings’ tax affairs. We can’t make the pocket money go further, but we can advise that when the kids grow up a bit, what your tax implications will be if pocket money were to become a wage and they went to work for you. Better still, we’ll help advise you both and help them stand on their own feet and start earning for themselves.

Here’s one final bit of advice from that Bank of Scotland survey, for hard-press parents. Move to North East Scotland, especially if you’re Glaswegians. Kids from the West of Scotland city are twice as likely to borrow from their parents as those who grow up with sheep in the fields and oil rigs on the horizon.

There’s probably a couple of broody economists right now checking out houses around Aberdeen and language classes in Doric.

About the Springfords blog

springfords blog

Some news, views and comments about everything and anything, relevant and irreverent.

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