- Wealthify speaks to 3 parents from across the UK to understand how the ‘Bank of Mum & Dad’ is playing a role in theirs and their adult children’s lives
- The case studies come after new Wealthify research revealed there has been a 6.2x increasein the number of people receiving lump sums of savings from the ‘Bank of Mum & Dad’ over the past few decades (7% in the over 65s vs 44% in 18-24 year olds)
- The research found that an average of 44% of British adults still receive everyday financial help from their parents, with this number only gradually declining once people hit the age of 45
It’s no secret that there’s a societal perception that younger generations ‘have it harder’ economically than generations gone before, meaning some feel the ‘Bank of Mum & Dad’ is becoming more crucial than ever before in helping adult children hit key ‘adulthood’ milestones.
In fact, new research from Wealthify has found that 6.2x as many 18-24-year-olds in the UK received a ‘lump sum’ of savings from their parents in adulthood than people aged 65+ (44% vs 7%).
The findings come as part of a new survey conducted amongst 2,000 adults across the UK by Wealthify to understand how getting a financial ‘head start’ from parents affects people’s everyday financial habits and behaviours.
When looking at the nation as a whole, Wealthify’s research found that nearly 1 in 5 (19%) adults in the population said they received a ‘lump sum’ of savings from their parents when they reached adulthood — the equivalent of over 9 million people — with the average amount coming in at £15,314.48.
But, to uncover the true reality of the ‘Bank of Mum & Dad’ in the UK, Wealthify also spoke to 3 UK parents to understand the role finances play in their and their children’s relationship:
Natasha Campbell, 50, from Birmingham, lives with her own mother and 9-year-old daughter, and, in a sense, experiences the ‘Bank of Mum & Dad’ from both sides. Natasha actively saves £600 from her daughter’s child benefit each year and puts it into a savings account for her.
Wealthify’s survey revealed that nearly half (49%) of young Brits (aged 18 to 44) worry they’ll never achieve financial stability. A sentiment that Natasha shares for her daughter: “I believe my generation is still in a much better position than generations past, but my daughter’s generation, and the one in front of her face high levels of student debt, higher rent and homeownership costs and, so much more.”
By 18, Natasha hopes to have around £10,000 saved for her daughter, which she would like her to spend on her first car and car insurance. The rest, she hopes her daughter will put towards her studies.
Similarly, Wealthify’s research found that most people (20%) who received a lump sum of savings from their parents spent the majority of it on a car, followed by property (17%) and then investments (14%).
Interestingly, while more younger people now receive lump sums of savings from their parents than past generations, the research found that they’re also more likely to say they feel bad about it. Where around 1 in 4 (28%) people aged 65+ said they felt bad about taking money from their parents, over two-thirds (67%) of 18-24 year olds said the same.
What’s more the research found that an average of 44% of adults still receive everyday financial help from their parents (including paying bills to lending money), with this number only gradually declining once people hit 45.
Similar to Natasha’s worries about the future, previous research from Wealthify found that 1 in 5 parents in the UK fear that life will be harder for their children than it was for them.
Something Louise*, 61, who lives on the border of Essex and Suffolk also feels for her two children, noting she was comfortably able to buy a flat in London when she was 25, but says it would be “impossible” for her kids to do the same now.
Louise has a 25-year-old son who rents his home with friends and a 27-year-old daughter who currently lives at home with her. Louise’s daughter recently moved home after living in London and doesn’t pay any rent to her parents but Louise told Wealthify that she worries she and her husband should be “charging her and saving it for her future”.
Louise told Wealthify that her daughter gets the maximum LISA contribution each year (£4,000) from her grandmother, who gives the same to each of her four grandchildren.
Similarly, in the Wirral, 54-year-old Joanne Simpson’s 20-year-old daughter lives with her and contributes to her LISA each month instead of paying her mum rent. Joanne told Wealthify her daughter has £20,000 in her LISA and that she also set up an investment ISA on her behalf, explaining: “Luckily, I don’t need the cash.
“My daughter also chose to do an apprenticeship instead of going to university, so I don’t have to fund that and I am a big advocate of women being financially independent and aware.
The survey also uncovered that conversations around money between parents and children have increased over the years.
Where just a third (34%) of respondents older than 65 said they openly discussed money with their parents growing up, nearly double (59%) of 18-24 year olds said the same.
For full details of Wealthify’s research, visit: https://www.wealthify.com/savings-account
