I’ve realised there are two versions of adulthood in Britain. The first is the one where you pay your own rent, cover your own bills and watch every pound that leaves your bank account. The second comes with a regular transfer from Mum and Dad.
Among my generation, financial support from parents is remarkably common. Most of my property-owning friends were either given interest-free loans from their parents or received an inheritance from grandparents that covered all, or most, of their deposit. Others get help with car payments, phone bills or the unexpected expenses that crop up throughout adult life.
This financial privilege is looking to continue. New research shows that almost a quarter of Gen Z adults are not saving for retirement as they’re relying on inheritance from their parents.
In today’s economy, it’s hardly surprising. Rents are sparing, house prices stubbornly out of reach and a weekly food shop somehow costs twice what it did a few years ago. “It’s a lot harder for youngsters coming into the workforce to find a job so parents want to give them a helping hand. The amount that they might be helping is increasing because of those elements,” says Alex Pugh, a chartered financial planner at Saltus, whose recent data shows that 73 per cent of high net worth parents have provided financial support for their adult children over the past five years.
“They want to give money to them at the most helpful point of their lives which is where you’ve got university, house deposits being common themes of an earlier helping hand. There’s also a personal perspective of the joy it brings, parents get an inherent amount of joy bringing their children forward and helping them in these circumstances.”
Collectively, parents have handed their offspring £38.5bn since 2021. According to UK Finance, those receiving family assistance can afford an average deposit of £118,073 and a property worth £317,846. Those without help manage a deposit of £60,741 and a home worth £279,381.
Of course I understand why parents do it; they feel they have little choice but to help. If I had a child struggling to afford rent while working full-time, which is the reality for many Gen Z workers, I’d want to help too. But I’m beginning to wonder whether all this financial support is actually as helpful as parents think.
Kara Gammell, a personal finance expert at MoneySuperMarket, says: “The research found that money habits that people have as adults are instilled by the age of seven, which is quite shocking. It’s almost ingrained whether they’re going to be a savvy shopper or an impulse spender by that age. However I think teenage years and early adulthood is a very important time to be taught how to manage money. It’s about getting the right balance so they’re not dependent on you forever. Parents need to encourage their children rather than being there to fix things all the time.”
One of the most valuable things I’ve learned in my five years of adulthood is how to manage my finances. Admittedly, I’m no expert. But without the financial Plan B that many of my peers have, I had to learn how to budget a small salary from a young age.
When unexpected costs arose, they came out of my own earnings. I had to turn down holidays and weekends away that friends could afford because half their rent was being covered, while mine was swallowing over half of my income. I’ve spent months carefully calculating every purchase before I made it.
That’s not to say I’m hard done by, nor that I’m somehow morally superior because I’ve paid my own way (if someone offered me an interest free loan just to help me out, I’d take it). But those difficult financial decisions taught me lessons that can’t be learned when somebody else is always there to absorb bad spending habits.
There’s a difference between helping your child through a difficult time and funding their lifestyle. I have friends in both situations. Some needed temporary support during genuine hardship. Others have never had to stand on their own two feet.
Gammell says parents should set a monthly budget for their children. “It can help them take ownership of their finances and have a better understanding of what they can and cannot afford to spend.” Pugh adds that her older clients are often wary of “children going over onto the side of them having an expectation that they don’t need to work for anything and they’re going to have a charmed life”.
“It’s a tricky balance.”
Young people undoubtedly face more challenges today. Bloomberg’s analysis of government data found the average salary for working-age graduates is around 30 per cent lower than it was 15 years ago. Meanwhile, the Institute of Student Employers found 1.2 million applications were submitted for just 17,000 graduate jobs in 2023-24.
There’s no question that young people need support but there is a danger that the Bank of Mum and Dad is being used to cover the cracks of an economy that no longer works. Parents see that wages haven’t kept up with housing costs and how difficult it is to land a stable job so they help. And then they help again and again.
Normalising the idea that adulthood requires a financial safety net is producing a generation depending on parental wealth. Not only is it unsustainable for the generations to come after us but it’s also producing many people who will never learn to handle their finances. “Don’t worry, mum will cover it,” is what my friend recently said when her car brakes started squeaking. Another has quit their “boring” job and having their parents support them until they find one that takes their interest.
The inequality between those of us without inheritance for financial privilege and those with backing is only getting larger. So while parents maybe helping their children in the short term, they’re also fuelling a generation of adults where independence is a luxury none of us will be able to afford, or pass onto our own children.