An increasing number of parents are supporting their children financially into and throughout their adulthood. There are a number of factors and changes in society that are contributing reasons for this.
For many parents this starts off when their children go to university, something that more and more young people are doing. Until now parents have had to pay for tuition fees although this will be changing. There are also the living costs of those at university, with many parents paying for at least a proportion of this.
On average, young people are living with their parents for longer. Parents are effectively paying higher bills and spending more on food than if their children did not live with them. There are a number of reasons for this trend. It is becoming more difficult for young people to buy a home and some are choosing to live with their parents in an attempt to save for a deposit as they are fearful that they will never be able to afford a home if they move out and have to rent elsewhere. People are also getting married later. The average age of first marriage for women has increased from 23 to 30 since 1981, while the average for men has increased from aged 25 to 32. Although the majority do not live with their parents until they get married, if people were marrying at age 20, for example, they would not live with their parents at that age. Increased unemployment over the last few years among those under twenty-five has had a major influence on the numbers remaining at the family home, with many not being able to afford to move out. Although many pay their parents some rent, for most this is not as high as it would be were they living elsewhere. It tends to be more to cover parents’ costs rather than for them to make a profit as is the case with landlords.
It is not just the case that young people are not moving out of their parent’s home until they are older but some have returned to live with them at a later stage. Those being made redundant and losing their jobs have sometimes moved back home for the short-term, and in some cases this has become more long-term than intended due to difficultly finding work.
Living costs are increasing at a higher rate than wages and this inevitably means people have less money in their pocket. Parents who are in a more financially stable position than their children are often happy to help financially where possible.
With the increased home deposits now required, more parents who are able to do so are helping their children to buy their first home. This is a big cost and something many are unable to afford on their own.
Instances where two parents have to work are increasing due to increasing living costs and many unable to support two adults plus children on one salary. This means those with young children have to find somebody else to look after their children while they are at work. With childcare expensive (and also increasing) more parents are helping with this, particularly if they are retired. They are looking after their grandchildren while their children are at work. This is not helping them financially by giving them funds, but rather by helping their children keep down their costs.
The extent to which parents are having to assist their children financially is a worrying trend that may concern young parents believing this will be the same for them further down the line. Parents of young children, though, can avoid the likelihood of having to support their children financially when they are adults. Beginning to save or invest on their behalf is a good way of doing this. The new child ISA, named the Junior ISA, is a good option whereby parents can invest up to £3,600 a year for their children. The advantage is that interest and capital gains are not taxed.
Andrew Marshall ©
