Helping children or grandchildren to achieve their life objectives is one of the most common financial goals.

Whether that’s in the form of imparting knowledge so they can make sensible decisions with their wealth, or by gifting them money or assets directly, you may well aspire to help the children in your life to have the same financial independence you’ve achieved.

Interestingly, amid rising costs, higher interest rates, and the backdrop of a recession at the end of 2023, younger people are increasingly reporting that they’re having to abandon their goals for financial reasons.

Indeed, MoneyAge reports that nearly half of 18-34-year-olds have suspended life goals, such as having children, because of affordability issues.

So, if you want to use some of your wealth to assist your children or grandchildren in staying on track towards their goals, here are four ways you could do so.

1. Gift them a “living inheritance”

When you pass away, your children and grandchildren could benefit from receiving a sizable inheritance from you. However, this may be too late if they’re cutting back on saving or investing towards their goals now.

So instead, you could consider gifting them a “living inheritance”, effectively giving them the money now that they would receive when you die.

By doing so, you’ll offer them a lump sum that they can use for whatever goals they want to achieve. This can be one of the most helpful choices you can make, as this money could make the difference that keeps them on track towards their targets.

Furthermore, it can be a hugely rewarding way to use your wealth, as you’ll be able to see the positive impact that your money has had on their life, which you would not be able to do if they inherit from you on your death.

This could benefit them further down the line, too, as giving them their inheritance now could see this money fall outside your estate, ultimately reducing the size of a potential Inheritance Tax (IHT) bill.

Bear in mind that there are rules for how much you can tax-efficiently gift, and the recipient may still have to pay IHT. It can be worth speaking to a professional so you don’t fall foul of these rules.

2. Help them with buying their first home

For the younger generations, buying a home may seem almost impossible. Due to house prices outpacing wage inflation, the Guardian reports that it would take first-time buyers nearly 10 years to save for a house deposit.

As a result, your children and grandchildren could benefit from support to help them realise the goal of owning their own home.

There are various ways you could support a child in buying their first home and save them the 10 years it would take to save their own deposit.

That could involve directly gifting them the money. Or, they might prefer that you loan them this sum, with them agreeing to pay it back. That way, they can achieve their goal of home ownership, while still retaining some important financial independence.

Alternatively, you could support them without giving them any money at all. For example, you could act as a guarantor for them on a guarantor mortgage, agreeing to make their repayments if they’re unable to.

Finding the right strategy here revolves around how they want to reach their target; would they prefer you just give them the deposit, or would they rather try to do it themselves with your support there if they need it?

Whatever they decide they’re most comfortable with, one of these options could help them get their feet on the property ladder.

3. Look after their children so they can return to work

Childcare is highly expensive. According to Moneyhelper, the average cost of sending a child under two to nursery full-time for a year is £14,030.

This can be a contributing factor for many adults – particularly women – not being able to return to work after having a child. In extreme cases, it may even stop people from having children, knowing that they will have to choose between paying these high costs while their return to their jobs, or staying home and putting their careers on pause.

So, if you have the time and are financially able to do so, you could offer to look after your grandchildren or great-grandchildren. Even if you only did this for half the week while the child goes to nursery part-time, Moneyhelper figures show that this would save nearly £7,000 a year.

This could be invaluable to the parent you’re supporting. Not only would it present significant savings for money they can use to achieve their other life goals, but it would also allow them to realise the targets of having a child and building a career.

If you’re yet to reach State Pension Age and have gaps in your National Insurance (NI) record, there may also be a financial incentive for you to care for a child under 12, too.

Provided that the child’s parent claims Child Benefit, they can transfer Class 3 NI credits they’d receive for childcare to you. So, caring for the child may help you fill gaps in your NI record if you have any.

4. Make contributions to their pension

When the cost of living is rising, your child or grandchild will no doubt look for ways to reduce their outgoings. They might find an area of their finances they can cut back so they can continue with their current lifestyle and reach their shorter-term goals.

Worryingly, pensions are one of the first places your child might look to cut back. Figures published in the Guardian show that 1 in 5 Brits had cut their pension payments amid rising costs, with almost one-third of those in the 18-34 age bracket having done so.

However, the knock-on impact of this can be that they’re then unable to reach their goals in future as these missing contributions cause a shortfall in the retirement savings they’ll need. It can be difficult for them to see this as well, considering that they won’t need to access their pension for perhaps another 30 or 40 years.

Fortunately, you might be able to help here by making pension contributions on their behalf. These contributions are still tax-relievable at your child’s marginal rate, making them highly tax-efficient, and could make all the difference in the lifestyle they’ll be able to enjoy down the line.

That way, they can maintain their current standard of living and reach their targets in the short term, safe in the knowledge that they’re continuing to build a pot for later life.

Get in touch

Want to find out how you can use your wealth to support your children or grandchildren in reaching their life goals? We can help at Cordiner Wealth.

Email hello@cordinerwealth.co.uk or call 0113 262 1242 to speak to an experienced adviser today.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate tax planning or estate planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.