Credit crunch hits Bank of Mum and Dad
Research from AXA reveals that the Bank of Mum and Dad has been forced to cut back spending on children and in some cases ditch free hand-outs altogether.
As the credit crunch bites, parents are introducing stricter lending criteria and encouraging their kids to save.
AXA says that around five million parents have taken measures to combat tough times with the result that children are now feeling the effects of the economic downturn.
According to AXA some 17% of parents have curbed their children’s spending by reducing the amount of cash they hand out or by cutting their kids’ allowance completely in the past six months.
A further 21% of parents – around 2.8 million people – claim to have encouraged saving, possibly in an effort to improve liquidity and reduce exposure to one-off demands for expensive items.
Teenage customers of the Bank of Mum and Dad are most at risk of being refused access to lending facilities, according to AXA. One in 10 parents of 16-18 year olds say they have stopped lending money to their children altogether.
Alison Green, spokesperson for AXA, said: “The Bank of Mum and Dad has so far been quiet on the issue of how it will deal with the effects of the credit crunch. But now it has come out and shown teenagers have been hit hard.
“Over half of the teenagers we polled said their parents give them money if they run out and one in five knows they will get what they want if they are persistent enough. So there are plenty of young people who have got used to getting what they want, when they want it.
“But all that may change as parents find their finances stretched to breaking point for the first time in years. Parents are getting tough and kids are not going to like it.”