Financially fabulous
With the cost of living pulling on our purse strings, families are having to lean on one another for support. This is what family finances look like in 2024
The long-term effects of these tough economic times are well documented: a younger generation who can’t afford to move out, families struggling to pay for childcare and a ‘sandwich generation’ who are balancing finances between the needs of children and care for ageing loved ones. As a result, families are increasingly taking a multigenerational approach to finding solutions.
Whether it’s grandparents providing free childcare, a lump sum from a relative towards a house deposit or a loan from a sibling to tide things over, the family support network has stepped it up over the past few years.
Research by Legal & General shows the average amount of money given by family members to help others out is £25,600, up 50% on 2020. In lower-income households, the charity Working Families reports 42% of families relying on using informal childcare, such as grandparents, to manage. And in a survey by investment management company Charles Stanley, 12% said they had adult children living with them rent-free or were supporting them by paying their household bills.
‘Family finances have changed as our lives have shifted,’ says Emma-Lou Montgomery, associate director at Fidelity International. ‘It has become a far more diverse, multigenerational grouping. While parents have long been leaned on by grown-up children when it comes to loans and advice, parents are now leaning on their offspring for financial help and guidance, too.’
While it’s natural to want to help struggling family members, it’s important to communicate clearly about what you can and can’t offer to help. We’ve put together a guide to the key issues surrounding family finances today, with some sage words from the experts.
A roof over everyone’s heads
Between historically high house prices and punishing mortgage rates, first-time buyers have it tough. No wonder, then, that more than one in 10 people aged 30 to 34 are still living with their parents, up from 8.6% a decade earlier*. According to research by Legal & General, a third of parents and grandparents welcomed adult children back home to help them save for a house deposit, and 77% of buyers received money towards a deposit from family members. ‘Increasingly, parents are stepping in by gifting deposits, guaranteeing mortgages, releasing equity in their home or even moving to a cheaper property to free up money,’ says Paula Higgins, CEO of HomeOwners Alliance.
OPTIONS FOR FAMILY WANTING TO HELP:
‘The most popular route for those who can is to give their children money to make up any shortfall in their deposit and boost their borrowing po
