In recent years, the Bank of Mum & Dad has supported young adults through many of life’s most expensive milestones, from higher education to weddings and buying a home. According to research from the Institute of Fiscal Studies, parents handed out almost £14 billion a year between 2018 and 2020, and analysis from property group Savills found that the Bank of Mum & Dad supported nearly half (49%) of all first-time buyer housing transactions in 2021.
However, our latest Youth Economy Report reveals that over half of parents (52%)* plan to reduce the amount of money loaned or gifted to adult children, and the overwhelming majority of 6-18 year-olds don’t expect parents to contribute to their financial future*.
“I’m hoping to buy my first house when I’m 18. My mum and I watch Homes Under the Hammer in the school holidays, and I’d like to buy a council house, as it’s a bit cheaper, then I can work on it and rent it out for good money. I’m also saving to buy a car. Any five-seater will do, as long as it’s cheap and drives without any problem. It’s important to start saving now as when I’m older I will have to look after myself.”
Theo, age 8
Financial independence
Even though they’re growing up in a time of economic instability, our research indicates that today’s kids and teens are already on track to become the most financially empowered generation in history.
Our latest research* shows that almost three-quarters of young people (74%) don’t expect their parents to help pay for their wedding, 72% don’t expect their parents to help them buy a house, and 64% don’t expect their parents to help foot the bill for the cost of their education, such as paying for university, training or an apprenticeship.
So how are they planning to achieve financial freedom?
More than four in ten kids aged 6-18 (42%) say that recent events like the Covid pandemic and the Cost of Living crisis have made them more likely to start saving early for these big life events – and our data** reveals that GoHenry kids and teens are saving 145% more than they did last year. More than a third (35%) of young people are planning to save to buy a house, and 65% of those who are already saving have put away up to £1,500 for this purpose*.
What’s most impressive is that young people are starting to save well before they hit their teens. GoHenry data shows that 6-10 year-olds are putting more money aside for university, with a savings increase of 11% per child compared to the previous year**.
“I’ve been saving £1 per week for almost a year, and I hope to have saved about £2,000 by the time I go to university. I’d like to study either art or psychology as I love art and drawing but I’d also like to be a therapist. I know my education is really important, and working hard can give me more opportunities so I want to give myself the best possible chance to do well. University can be quite expensive, and I’d like to have the choice of where I study.”
Ellie, age 11
Financial education
Our Youth Economy Report* reveals that 86% of parents are now worried about their kids’ financial future, and the extent to which they can contribute. We found that almost a quarter of parents (24%) don’t plan on saving money to help their child buy property, 15% don’t plan on saving to contribute towards the cost of their child’s education, 49% don’t plan to save towards their child’s pension, and 19% don’t plan to save to help them buy a car.
“I’m saving for a deposit so that I can buy my own home when I’m 19. I’d like to live in an apartment with a spare room to rent out which will help to pay the mortgage. I’ll probably stay in the area where I grew up, but it depends where my mum and dad are living. I’d also like to live near B&M Bargains and McDonalds.
My mum and dad have been saving for me since I was born. When I got my GoHenry account I started saving the money I earn for cleaning my bedroom, which can be up to £20 per week. I also save the money I get for Christmas and my birthday. I’m always coming up with new ways to make extra money to add to my savings, such as making notebooks or dog leads and collars to sell.”
Eva, age 7
As a result, financial education has never been more important. Almost half of parents (47%) believe that they can help their child to be financially free in the future by teaching them how to budget, how to recognise the difference between wants and needs (39%), teaching them the money skills they’ll need in adult life (37%), encouraging them to save a portion of their pocket money (32%), and talking openly about money within the home (30%)*.
Despite the decline of the bank of Mum & Dad, a focus on financial education means that kids’ financial futures look bright.
“The Bank of Mum & Dad will always exist, because parents still want to help their kids as much as they can – particularly when it comes to getting an education or buying their first home. However, it’s clear that Gen Z and Gen Alpha no longer can – or want to – rely on it, and are finding ways to forge their own financial futures at a much younger age than we’ve seen in the past. As a result, parents will be less likely to bear the financial burden of paying for their adult children’s life events.”
Louise Hill, Co-founder and COO, GoHenry
* Research undertaken by Censuswide on behalf of GoHenry, from 22.03.2023 - 27.03.2023. 2,002 UK parents (aged 21+), and their children aged 6-18 years, were surveyed.
** Based on 746,175 active GoHenry members between 01/03/22 and 28/02.23.
