Research by Saga found that grandparents give an average of £9,360 to their grandchildren, with those in London and the South East handing over the largest amounts.
Some 23% said they spent money from their grandparents on education, while 13% spent the funds on a holiday. Driving Lessons were the third most popular source of grandparent’s money, while 9% used the funds given to them on house deposits.
A third of grandparents still consider or intend to give a financial gift and one in 10 would consider lending money to their grandchildren, the research claims.
According to Saga, grandparents view the gifts as an early inheritance, with over half saying they want their relatives to enjoy the money.
Many grandparents do not specify what the money should be spent on, while some 40% said they were happy for their grandchildren to spend it on what they would like.
As part of the research, Saga interviewed 5529 people online between 18 and 24 July 2017, all of whom where grandparents aged 50 or older.
Alex Edmans, head of product at Saga Money, said: “Most of the money grandparents are gifting is coming from their cash savings, so whatever small amount of interest they are missing out on is clearly outweighed by the joy they get by seeing their grandchildren benefitting from the money.
“If you are giving your grandchildren support as a loan rather than as a gift it pays to take a few sensible steps so there is no awkwardness later on. Only half of grandparents say they discussed repaying the loan with their grandchild, our advice is to be upfront about the conditions of the loan including how you would like the money repaid in order to avoid difficult conversations at a later date.
“Our customers are increasingly turning to gifting money through equity release in order to help grandchildren onto the property ladder. On average they take £33,000 out of their property in order to give to family.”