Buying a first home may be the biggest financial milestone for young adults, but the Bank of Mum and Dad is being called upon in myriad other ways, according to a poll by interactive investor.
Helping with university costs (58%), allowing adult children to stay at home, rent-free (50%) and buying a car or helping with car-related costs (46%) were all more common ways of financially supporting adult children than contributing to a deposit for a home (42%).
More than a quarter (28%) had made a payment into a savings account and 23% had made a payment into their adult child or children’s ISA, the poll found. Although lagging by some margin, a forward-thinking 10% of respondents said they had contributed to their adult children’s pensions. Non-financial help in the form of things like valuable childcare, was offered by 14%.
| % of respondents | |
| Helped with university costs | 58% |
| Bought them a car or helped with car-related costs | 46% |
| Allowed them to stay at home, rent free | 50% |
| Contributed to a deposit for a house | 42% |
| Contributed to their pension | 10% |
| Made a payment into their ISA | 23% |
| Made a payment into their savings account | 28% |
| Helped in non-financial ways, such as childcare | 14% |
| Not helped financially or non-financially | 14% |
Becky O’Connor, head of pensions and savings, interactive investor, said: “There is a lot of attention given to how the Bank of Mum and Dad can help with buying a first home, but this unofficial institution is busy in many other areas of financial support for adult children, too.
“More than half of respondents had helped with their adult children’s university costs and allowed them to stay at home, rent-free. A large proportion had also helped with car costs, as well as house deposits.
“The high percentage of older people helping out their adult children reflects a depressing reality: that it is difficult, if not impossible, to manage these life milestones without any parental help.
“The poll suggests that the younger generation is strained financially, dependent on their parents for many ‘big ticket’ costs that would be beyond their ability to save for.
“Parents have become the gatekeepers to their children’s adulthood; the wealth level of the previous generation ultimately determining which milestones are achievable and which are not.
“That’s just those whose parents are able to help, of course. The scale of the assistance also demonstrates how the odds are stacked against those whose parents can’t help when it comes to wealth accumulation.
“It’s an economic dependence that can have practical and emotional consequences, both for the parents, who may not have foreseen having to support their children quite so far into adulthood, and for the children, who may want to be financially independent, but find they cannot yet manage it. It also has social consequences, for instance, through young adults delaying having children or choosing not to go to university.
“Among those parents who are able to help, it’s heartening to see payments into pensions and ISAs feature among the responses – a recognition that there are other ways to assist beyond leg-ups onto the property ladder and where the rewards might not be reaped for decades to come.
“A pension top-up, though perhaps less welcome than a lump sum that can be used in the here and now, could be extremely valuable one day.”
