Bank of mum, dad and sister: family members turn to one another in crisis

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Madeleine Knight* is dreading the winter. Not for herself, but for her 57-year-old brother, who lives with Parkinson’s disease and dementia in a house with a prepayment meter for their energy. Last year, he and his wife were afraid to put on the heating for more than an hour at a time.

“They spent the winter huddled in dressing gowns. How are they possibly expected to cope with the cost of living this year?” says Knight.

On a pension of £10,000 a year, she gives them about £100 a month to help them manage, although they struggle constantly.

“I cannot bear to see them suffer, especially as my brother probably doesn’t have long to live. His wife should not have to worry like this – I often wonder if she will snap under the strain, and harm herself, and him.

“I would not blame them for ending their lives – they have nothing to look forward to, and no hope. I cry every day thinking about how bleak and dreadful their lives are.”

Knight is not alone in worrying about her family. As the cost of living crisis worsens, and energy bills rise, grandparents, parents, brothers and sisters are turning to each other for financial help.

Observer readers have been telling their stories.

Grandparents: cash for food

Charlotte Cole* helps her granddaughter, who is in her 20s and brings up her younger brother while in a job with a zero-hours contract. Cole buys groceries every few weeks to ensure they have enough food.

“We have, on many occasions, had to transfer money quickly because there’s none at all, and they need food, or electricity, or both,” she says.

“We have huge concerns for the future. We’ve been really stretched this year helping them to get through, and now we’re all facing a huge hike in energy and food inflation, and can’t see how we’ll be able to help enough during this winter.”

Parents: lending as costs soar

Samuel Beach, 30, an insurance fraud investigator from East Sussex, says he and his partner have a combined income of £65,000, but may have to borrow from parents over the next year.

Energy bills for their poorly insulated home are expected to go up substantially, and their mortgage payments will rise by about £300 when they come off a fixed deal next April, amid rising interest rates.

After rises in energy costs, Beach estimates the couple will be paying an additional £600 a month.

“We are fortunate to have what we have, and I know that others are not so lucky,” he says.

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“People in our position should not be struggling, but struggle is very much what I expect us to do over the next year.

“I cannot imagine how families with children, and single or low income households, are coping right now. I cannot fathom how hard it must be for those not as fortunate as us.”

Taking a loan from family members, while often convenient and usually without interest, does come with downsides. Debt charity StepChange warns that it could lead to a strained relationship if you are unable to pay it back. Almost one-fifth of people who come to the charity with debt problems owe money to family, it says.

Sister: arranging a loan

Paul Miller* says it did not “sit well” with him when he had to take a loan of £2,500 from his brother.

When he had to spend up to £200 a week on petrol for his IT contracting job, and his mortgage went from £220 to £800 a month, Miller and his wife found themselves seriously struggling and having to borrow from family. “It just changed the dynamics of the relationship in my eyes,” he says.

One of his wife’s sisters later secured a personal loan in her name for £25,000, which the couple are paying off over the coming five years.

“Without being able to borrow that money, I don’t know what would have happened. We would have lost the house. At one point we were going to sell the house and just go into rented accommodation.

“But my wife’s sister helped us out with a bank loan, and I’m comfortable with that because it is not her money alone.

“We set up a direct debit and it is not even talked about.”

The dangers

While many family members will want to help siblings and children, they have been warned they should not lend when they may need the money themselves.

Sara Williams, of the Debt Camel blog, says young adults and parents with young children are some of the people worst affected by the cost of living crisis, as they face high rents and lower wages.

“Many parents will want to help where they can. If you have savings to spare, then giving the money when it is needed now may be better than leaving it to be inherited later,” she says.

“But don’t take money from a pension that you will need – and avoid borrowing yourself, because, if things get worse, your son or daughter may be unable to keep up the repayments to you.”

* Names have been changed