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Parents Expect Their Children To Become Financial Grown-ups At The Age Of 29

19 September 2016

Parents in the UK expect to support their children until the age of 29(1)

Turning 18 may have once symbolised the beginning of adulthood, but the journey to financial independence is lengthier and more costly than parents may have bargained for. New research(1), commissioned to support Sainsbury’s Bank’s second Family Finance Report ‘The Family Lifecycle – The Learner Years’, reveals that on average parents in the UK expect to support their children until the  age of 29, while 24% expect that 21-25 is the age when financial support will stop. There is a three-year disparity between how long both genders expect to have to financially support their child, with women expecting the cut-off point to be 30 years and men, 27 years.

The bank’s research into the cost of supporting children through adulthood shows that significant birthday parties such as 16th, 18th and 21st  are the expenses  most parents expect to cover (52%) followed by driving lessons (50%) and money towards their children’s wedding (40%). Other significant contributions include help to buy their first car (38%), putting them through university/living expenses (38%), money towards rent/ rent deposits (23%), deposits for property purchases (21%), regular financial top-ups to income (18%) and gap year travel plans (8%).

Analysis(2) of Sainsbury’s Bank loans data reveals that last year parents in the UK took out nearly £2 million in loans to support their  children. Nearly half of all such loans were for weddings, with the average value standing at over £12,000. Other popular reasons for taking a loan to support a child were education, including university fees, costs and trip expenses, with an average value of £13,000; loans for children’s cars (£9,500) and household expenses (£8,000).

Loan purpose(2) Average value
Education £13,039
Medical £12,850
Wedding £12,395
Gift £11,315
Car £9,590
Home £8,035
Financial Support £5,409
Average value of loan taken out to financially support a child £11,179

 

Simon Ranson, Head of Banking, Sainsbury’s Bank said: “Providing financial support to grown-up children is something that parents are having to factor into their financial planning nowadays.  Many young adults struggle to achieve financial independence and rely on their parents’ support for much of their early adulthood. It’s vital for parents to instil the importance of financial savviness in their children from an early age and steer them towards financial independence while offering support where needed.”

For many families, flying the nest is a shared journey as parents take responsibility for the financial burdens of young adults until they can earn enough to achieve complete financial independence. Sainsbury’s Bank’s analysis of ONS data(3) shows that around one in four young adults lived with their parents in 2015. Nearly half of 20-24 year olds lived with their parents, compared with a fifth of 25 to 29 year olds. For 30-34 year olds, this figure was less than one in 10.

Overall, there were more than 3.3 million adult children (aged 20 to 34) living with their parents in the UK last year, representing over a quarter (26%) of their age group. This is 618,000 more than in 1996, when 2.7 million adult children lived with their parents, representing just over a fifth (21%) of their age group.

This correlates with a decline in the number of young adult homeowners, which has decreased from 55% in 1996 to just 30% in 2015 for 25 to 29 year olds and from 68% to 46% for 30 to 34 year olds.

The trend for ‘emerging adults’ flying the nest later in life can be explained by an increasing need for extended education and training, a challenging job market and an increase in property and rental prices across the UK.  Parents who are putting their children through university may face annual fees of up to £9,000 in the UK(4)  and an average student rent cost of £6,201 (5). Those paying for their children to learn how to drive can expect to pay £1,128 in lessons,  £34 for a provisional license, £25 in revision materials, £23 to cover their theory test and from £86 to £99 per practical test(6).

The cost of rent and property is a financial burden that many families are forced to share due to sometimes very high prices. Rental and housing data(7) reveals that the average annual rent in UK is £9,169, which shows a 4.9% increase within the past year. In 2014, the average deposit needed to buy a house was £43,546, which shows a 35.4% increase within the past ten years(7).

Jasmine Birtles, Founder MoneyMagpie and author of the second Sainsbury’s Bank Family Finance Report said: “Today’s parents are the first to face the perfect storm of expensive university fees, sky-high property prices and near unaffordable rents in cities, none of which they had to deal with themselves at their children’s age. Add in the increased difficulties that even graduates have to get a job and it’s clear the situation is far tougher for today’s twenty-somethings than it was when they were born.

“It’s quite right for parents to try to help their children in any way they can, but if they are to have a comfortable future themselves they will have to pick and choose what they help to fund and by how much. Maybe it’s time we taught our kids to be more realistic about things like weddings and gap years so that limited funds are spent on only the most important things like education and a home.”

Ends

Notes to editor

  1. Sainsbury’s Bank commissioned Opinium Research to survey 2,016 nationally representative UK adults aged 18+ between 27th to 31st May 2016. Opinium Research is a member of the British Polling Council and abides by its rules
  2. Analysis of loans taken out by Sainsbury’s Bank customers between January and December 2015. Data covers loans taken out for the purpose of financing children.
  3. Figures published in the ONS Families and Households 2015 report
  4. Figures based on UCAS tuition figures 2016.
  5. Figures bases on NUS/Unipol Accommodation Costs Survey 2015/16
  6. Figures based on Confused.com
  7. Figures based on April 2016 HomeLet rental Index and DataMarket
  8. Sainsbury’s Bank commissioned Opinium Research to survey 2,001 nationally representative UK adults aged 18+ between 20th-24th May 2016.

 

Expenses that parents expect to cover throughout their children’s early adulthood  (1) Percentage
Significant birthday celebrations-16th/18th/21st 52%
Driving lessons 50%
Money towards their wedding 40%
First car 38%
University fees/living expenses 38%
Deposit for rent/help with rent 23%
Deposit for property purchase 21%
Regular  financial top-ups to income 18%
Gap year travel plans 8%
None of the above 8%
Don’t know 11%

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