Monday, March 23, 2009

Consumers See Finances 'Being Pulled In Both Directions'

Britons could be set to find themselves under financial pressure due to the expense of looking after older relatives, new figures show.

In research released by LV=, elderly people receive a total of 21 billion pounds via unpaid care and assistance every year. And with adult children spending an average of over 33 hours every month supporting their parents, at an unpaid annual cost of 3,336 pounds, such consumers may see their ability to handle their finances hampered. Findings also showed that some 113,149 pounds is invested into elderly parents via unpaid care from their children over the course of a ten-year period.

Meanwhile, the study also suggested that many consumers are choosing to support their parents ahead of their own children. However, in addition to the elderly the financial services firm reported that the cost of raising children is also rising which in turn could put pressure on their ability to service various areas of their finances - for instance utility bills, mortgages and secured loans. Overall, it costs some 180,000 pounds to bring up a child from birth until they reach 21 years of age.

Mike Rogers, group chief executive for LV=, said: "Caring for elderly relatives is a huge commitment and an increasing number of families are being pulled in both directions by the pressure to support generations, both above and below. We can expect the overall burden of paid and unpaid care to spiral over coming decades as life expectancy rises and the baby boomer generation ages. There is, therefore, an increasingly important role for financial providers to play in helping people to plan their family finances generally and in particular their retirement funding."

He added that the rising availability of products on the market is set to increase "the options for people to plan ahead and avoid financial difficulties further down the road".

Meanwhile, the report indicated that a residential care home, which provides nursing care, costs some 74,000 pounds over the course of the 30 months the typical person stays there - an average of 570 pounds per week. Facilities supplying residential care usually cost some 398 pounds a week, or 51,740 pounds over 30 months. However, with the average Briton underestimating these costs by 30 per cent, a number of people could be set to face unexpected constraints on their money management which could extend to paying homeowner loans and other sources of borrowing.

Those living in the capital could be set for the greatest financial strains as a week at a residential care home in the Greater London area costs 558 pounds, with this rising to 778 pounds for residences incorporating nursing care. The Northern Home Counties - consisting of Bedfordshire, Hertfordshire and Buckinghamshire - are the second most expensive with cost of nursing and non-nursing care homes at 749 and 478 pounds per week respectively. On the other hand, Wales has the lowest prices in the country at 488 and 357 pounds.

Consequently, taking out a cheap loan could be a wise choice for those worried about financial pressures raising a child or looking after elderly relatives may entail. However, those considering borrowing should ensure that they take the time to make sure that they get the most competitive loan possible. Earlier this year, Robin Amlot, senior editor for Moneyextra, suggested that scouring the market to get the best-priced financial products, including personal loans, can pay "dividends".


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