Forget all the well-known financial institutions – Britain’s busiest bank has got to be the bank of Mum and Dad.
Because not only are parents financing their kids from birth to the age of 18, new research suggests they’re forking out substantial amounts for them until they’re at least 35.
Research from VoucherCodes.co.uk shows 57% of parents with children aged 18 to 35 are still providing regular financial support, spending an average of £363 (RM1,993) every month to help keep their adult children afloat – that’s more than £4,350 (RM23,893) a year.
Food shopping is the most common expense parents help with (51%), followed by clothes (36%), mobile phones (36%), emergency expenses (34%) and adult children living at home rent-free or at a reduced cost (33%).
But it’s not just life’s essentials being funded by the bank of Mum and Dad – more than a quarter (28%) of parents also help pay for adult children’s holidays, and 16% continue to pay for their streaming subscriptions, nights out (13%), festival or concert tickets (9%) and even gaming consoles (9%).
Not surprisingly, such comprehensive support comes at a meaningful cost to some parents – one in six (16%) says they reduce their own disposable income to support their adult children, while 15% have stopped adding to their savings as a result. Yet more than half (52%) say financially supporting adult children is simply part of being a parent – although 79% admit they became financially independent a lot earlier themselves, by the time they were 24.
Shifting goalposts
Clair Hughes, a savings expert at VoucherCodes.co.uk, points out that the bank of Mum and Dad has quietly become a fixed monthly outgoing for millions of families, rather than the occasional favour.
“A generation ago, financial independence meant moving out and covering your own basics,” she says. “Now the goalposts have shifted, parents are covering essentials well into their child’s late 20s, and even their 30s, and picking up costs that used to be seen as luxuries too.
“But that’s less about young people wanting more, and more a reflection of how much further wages and savings have to stretch these days.”
And the effect that today’s cost of living is having on young people is clear from further research by The Harris Poll UK, which found 70% of adults aged 18-34 worry they won’t achieve key financial milestones, and 63% think they’ll need a financial gift or inheritance to achieve at least some of their financial goals, including buying a property, which more than half (53%) believe they’ll never be able to afford without help from their parents.
Sarah Beams, managing director of The Harris Poll UK, says: “The bank of Mum and Dad has traditionally been talked about in the context of big financial milestones, particularly getting onto the housing ladder, but what our research shows is that family support is becoming much more embedded in everyday adult life.”
She stresses that the increased reliance on parental help isn’t related to complacency or a lack of ambition among the younger generation, but is a consequence of the current financial conditions.
“In many families, parents aren’t simply helping their children get ahead, they’re helping them afford the lives they’re already living,” she points out. “That means we perhaps need to think differently about what good financial support looks like."
Balancing the book
Here’s the experts’ advice for keeping the bank of Mum and Dad afloat as children get older and still want to make withdrawals:
> Set clear boundaries from the start
Hughes points out that parents don’t need to agree to all their adult children’s financial demands, and they should sit down and discuss with them what the bank of Mum and Dad will help with (perhaps things like food or bills), and what the child should cover themselves (like gaming kit and holidays).
She says: “Getting that conversation out of the way early stops financial support from drifting into an open-ended arrangement, and helps both sides to identify what’s essential and what’s nice to have.”
And Louise Hill, founder of the kids’ credit card and app GoHenry, adds: “It’s never too late to start conversations about money. It all comes down to finding that sweet spot between helping out and setting firm boundaries.
“That looks different for everyone, but simple rules like matching a percentage of what they save or only funding basic essentials can make all the difference.”
> Smaller ‘withdrawals’ may help more
As all the research shows young adults often need help with groceries, clothes and regular cash too, Beams suggests that instead of parents saving up to help with one big milestone like buying a property, it can be more helpful to finance smaller outgoings.
“Support isn’t just about house deposits any more,” she says. “Rather than saving everything for one big milestone, parents who have the means could think about when smaller amounts might make the greatest difference, whether that’s avoiding debt, protecting savings, or maintaining financial momentum.”
> Try to reduce the cost, not the support
Before you give your child money for an expense, check if there’s a cheaper way to cover it, suggests Hughes.
“Saving up supermarket loyalty points, using discount codes, buying clothing second-hand, or reviewing phone and streaming plans can all bring down what you’re contributing each month,” she points out.
“You can encourage your child to do the same on purchases they’re making.”
> Focus on building financial independence
As well as helping out financially, you can also help your children – and ultimately your own bank balance – by teaching them good money habits. Hughes says: “Encourage budgeting and normalise talking about money with your children from a young age to prevent them from growing up believing this is a taboo subject.
“Make sure your child is saving towards specific goals and they’re taking on more financial responsibility over time, so the support you’re giving becomes a stepping stone rather than something they lean on indefinitely.”
And Beams adds: "Parents can potentially pass on more than money itself by encouraging earlier conversations about saving, investing, pensions and planning, helping younger adults make more of the money they do earn.”
> Review support as circumstances change
Hughes says it’s worth regularly revisiting the financial help you give your child, rather than letting it run on autopilot, pointing out: “As your child’s income, job situation or expenses change, so should the level of support. It keeps things fair for you and gives them a clear sense of progress towards standing on their own feet.”
> Think springboard, not just safety net
Beams points out that The Harris Poll UK research suggests seven in 10 young adults worry they won’t achieve key financial milestones, so she suggests: “Where parents can help, the question could be less ‘what do they need money for?’ and more ‘where could this money increase their choices?’
“That might mean supporting training, building a savings buffer or helping them take an important next step.” – PA Media/dpa
