- A third of young people (18 to 34 year olds) receive regular monetary ‘support gifts’ and could only maintain their lifestyle for approximately 18 weeks without them
- Parents and grandparents will spend nearly £1,400 a year on monthly support for their adult children (£113 a month)
- The gift that keeps on giving: Young adults who have received regular monetary gifts, since turning 18, have received nearly £20k (£19,347) of financial support from their parents and grandparents
A third of all young people – those aged 18 to 34 – receive regular monetary ‘support gifts’ from their parents and grandparents, according to research from Legal & General Home Finance1.
According to the findings, of those who need financial support to make ends meet each month they could only maintain their current outgoings (e.g. bills, rent) for up to 4.5 months if this support were to stop.
Many young people appear to utilise gifts from older family members to supplement their income. On average, since turning 18, young adults have received £19,347 in regular support gifts from their parents and grandparents2.
In 2020, the need for family support has increased further.
On average, parents who provide monthly support will give £1,356 a year, in the form of a monthly gift (or £113). This has increased by 26% in 2020, as parents have added an additional £353 in support to help their children face the financial pressures of the pandemic.
The research comes at a time when young people are more dependent on family as a financial safety net than ever before, as Office for National Statistics results reveal that the unemployment rate among young people is far higher than the overall rate (14.6% vs 4.8%)3.
This pinch may be further impacted by a fall in seasonal jobs due to fewer available non-essential retail roles in the run-up to Christmas, typically filled by younger workers.
For parents that provide financial aid, the majority will come from their own savings (49%) or income (43%). 14% of parents will use property wealth such as the sale of property, to provide gifts. Legal & General has found that of its equity release customers, approximately 1 in 6 will use part of their payments to support gifting.
While most parents like to ensure gifting is split equally across any younger relatives (68%), in one in five cases (21%) the amount given varies across family members. This is usually driven by the individual’s needs (61%) but 27% parents admit they feel closer to the relatives they provide additional support to.
Claire Singleton, CEO of Legal & General Home Finance, said: “It is clear that without the generous gifting of parents and grandparents, many young people would be unable to independently sustain their lifestyle. The monthly cost may not initially seem high but as we can see from our data, the cost of gifting to younger family members can add up over time.
“In addition to monthly support, many parents and grandparents will be called on to provide additional one-off payments to help with large expenses like weddings or putting a deposit on a house.
“Utilising property wealth, by either downsizing or using equity release, can often be helpful here as it allows the opportunity to give a living inheritance without touching your income. However, these decisions aren’t easy and should be closely considered. Be sure to do your research, free information from the Money Advice Service is a great place to start, or, if gifting is likely to have an impact on your retirement income, turning to an adviser may be the right path.”
Many people who provide support are happy to do so, respondents to the research shared the following:
“I supported my younger brother when he started sixth form this year. It really makes me feel good, satisfied and enriched that I’m making a difference in someone else’s life.”
“We provided financial support to my partner’s children during the pandemic… they weren’t working, they didn’t have any savings to pay for their rent. We actually paid for all of them during the time of the lockdown. We’re quite happy to have supported them through it, I wouldn’t see them struggle.”
Those who receive financial aid often feel it brings them closer to their relatives, respondents to the research shared the following:
“It’s been hugely helpful for me as that gave me the push to buy at that time, it’s given me the chance to own my own home … It’s something I hope to be able to do for my own children in the future.”
“I recently received a sum from my aunt, she said she would rather be alive and see me make use of the money…since receiving it I definetely feel a lot closer to her. I just feel eternally grateful that she’s done that for me.”
NOTES
1.Opinium Research ran a series of online interviews among a nationally representative panel of 4,001 UK adults between the 25th September and 3rd October 2020
2.This is averaged across all people 18-34 who have received financial aid from their parents or grandparents.