2nd November 2015
More so than ever before parents are increasingly being relied on to support their grown up children’s lifestyles, according to the 2015 Lloyds Bank Family Savings Report.
However, while most expect this support to come in the form of a deposit to help get on the housing ladder, increasingly it is actually everyday expenses that are being supported, with rent payments almost doubling in the past two years.
The latest research findings highlighted that more than £30bn has been handed over to children aged 18 and over in the past year by their parents, an increase of £1bn on the previous 12 months and more than £5bn since 2013, marking a 21% increase in just two years.
Meanwhile, grandparents are adding additional support to their adult grandchildren to the tune of around £6bn. In all, young adults have received almost £37bn pounds in handouts from family members this year.
While the past year has perhaps been more settled, overall support ticked up, just outpacing inflation, to pass the £30bn mark. On a per-head basis, UK 18-64s now receive an average of £763 a year from parents and £916 a year from parents and grandparents together.
The research also indicates that parent’s attitudinal commitment to supporting children financially remains strong. The study also found that two thirds of UK adults, at 68%, admitted that they would feel they were letting down their family if they did not save for the future.
Whilst a similar amount, two-thirds feel that children cannot hope to achieve success in life without financial support from their parents, and close to three-quarters believe that parental financial support will become more important in future.
Generation ‘thanks for paying my rent’
Whilst the expected items like a wedding and a house are high on the list for reasons for lending money, the increase in demands on parents’ purses was driven primarily by big increases in levels of parental help with rent payments – up from £2.4bn to £4.1bn in the past two years and by similarly large increases in help buying cars and vehicles, now £4.08bn.
Other items on the rise in the past year are help with day-to-day shopping and buying appliances.
Philip Robinson, savings director for Lloyds Bank said: “There is an increasingly clear majority of UK families which now endorse a strong financial role for parents, expressing a sense of financial duty to future generations. However, parents must sometimes feel that they are on a merry-go-round with their grown up children’s financial needs.
“As we move away from demands for cash debt relief and help with energy bills, we see increases in demands for more fundamental help with housing costs and big-ticket purchases.”
The research has looked at the level of influence parents have over their grown up children’s’ lives, for example over day to day spending decisions, or on personal and financial matters, and how that relates to the level of financial support they provide.
Even as recently as 2013, the UK could still be characterised as a nation of ‘cash-point parents’, who provide a relatively high level of financial support to their grown-up children, but have a relatively low level of power and influence in their kids’ lives.
But by 2014, the balance had tipped, and ‘power parents’ had become the most common type of parent in the UK.
In 2015, ‘power parents’ remain the most common type, and have increased their prevalence to 33%, seven points up on 2011. This suggests parents are continuing to provide ever-higher levels of financial support, but are demanding ever more in return, in terms of power and influence.
Robinson added: “For young adults today increased levels of parental support very much come with strings attached. Our latest research confirms that this is a lively trend. For today’s young adults, the majority are increasingly heavily financed, and heavily influenced, by their parents.”