Editor's letter

The best thing you can do for your children is to secure your own finances

The "Bank of Mum and Dad" is now the 11th-largest mortgage lender in the UK. But giving your children money may not be the best way to help them, says Merryn Somerset Webb.

Pensioner shivering with cold next to old-fashioned stove © Getty Images

Generosity is fine but make sure you look after yourself too

You might be worried about the possibility of a global recession, trade war, or even Brexit. I'm worried about the Bank of Mum and Dad (BoMad). The latest report from Legal & General on the amount lent inside families to those wanting to get on the property ladder shows a huge transfer of wealth down the generations. In 2018 BoMaD lending came to £5.7bn. This year it is forecast to hit £6.3bn, with the average contribution knocking around £24,000. It isn't quite the same thing (most parents don't expect the money back), but on the numbers alone, this makes families the 11th-largest mortgage lenders in the UK.

The trend makes sense, of course: one of the reasons for rising wealth inequality in the UK (as everywhere) is that we are all living longer so wealth is trickling down more slowly than it has in the past. There's also nothing wrong with it: if you have spare cash why on earth not give it to your children to spend? As financial advisers like to say: there are no pockets in a shroud. The problem is that those who don't have spare cash are giving too finding it by downsizing, using equity release, cashing in pensions and, worst of all, taking out more debt themselves.

The result? Twenty-six percent of those who have lent or given money say they are worried they won't have enough to live on in retirement; 15% say they have already accepted a lower standard of living; 11% say they feel less secure. In a world where the state pension age is constantly shifting out, and so the number of people in receipt of it is shifting down (by about 300,000 in the last two years), this is miserable.

It also isn't very sensible. As I think I might have asked here before, will your children really thank you if, as a result of your generosity now, they have to help finance your old age later? I doubt it. Perhaps the best present you can give them is not your own delayed retirement (6% have delayed retiring to finance giving), but your own financial security? You can't control global markets or economies. You can (to a degree at least) control this.

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Finally to Brexit, where passions are as inflamed as ever. There is no one in this fight who isn't convinced they have right (and democracy) on their side. For more on this see here, where I look at how Adam Smith forecast the outrage machine.

You should also read our book reviews (yes, we do think you should read Rod Liddle on Brexit!), we also explain just how this proroguing business works, and finally we think about whether it is time to be "very positive" on the increasingly cheap UK stockmarket. Answer: if you can manage to rise above everyone else's Brexit hysteria, very probably yes.

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