Home or away? Grown children costing parents £23,000 in support
When a friend falls pregnant we affectionately joke that her life has effectively been put on hold for the next 18 years. No more spontaneous nights out with the girls, no more time alone with her husband, and no more disposable cash for the odd new season splurge for a whole 18 long years.
Let’s be realistic: a) the delight of having a new little bundle of joy completely outweighs any perceived negatives, and b) 18 years?! Try at least 23!
Sure, there once existed a time when children moved out between the ages of 16-18 to go to university or to settle in a new town to get their first foot on the career ladder. On this fateful day their independent lives began, and if anything saw them preparing for the day when they would start supporting their parents in old age.
One crippling recession later and the tables have turned. Parents are now having to support their grown up children – especially if they want them to move out – with little hope that the aforementioned children will ever be able to repay the favour.
Tuition fees soared to £9,000 a year in 2012 with proposals to cap fees at £6,000 providing little comfort for cash strapped students who face a lifetime of paying back their debts. Plus wages have crashed, making it nigh on impossible for first time buyers to get a foot on the property ladder without more than just a little bit of help from the Bank of Mum and Dad. The result? Kids (and by kids we mean twenty-somethings) are now choosing to stay at home while they study, or are choosing not to study at all, instead working their way up into a career the organic way …and that means staying in low-paid jobs for a considerable amount of time. Oh look, there’s that Bank of Mum and Dad again!
Fidelity Investments conducted a study into the cost of supporting grown up children, and how this is affecting the financial status of their parents. Unsurprisingly, many parents are finding that their savings are taking a serious hit, and others are being forced to put off retirement to continue to help their beloved offspring.
The dreaded inheritance tax is also playing a part, with parents keen to pass down as much money as they can before they pass away in a bid to stop their estates being plundered by the taxman. The rising cost of living means that the average cost of a grown up child living away from home is £23,059.26 as parents endeavour to help with mortgage deposits, rent, food and even paying back debts that their children have incurred along the way. While an average contribution of £985.47 is put towards a wedding, housing deposits are the most costly item at £1037.91. 5% of the parents interviewed are even spending upwards of £5000!
The moral of the story for new parents, or those who have yet to start families, is quite clearly to plan ahead. A child is for life, not just for 18 years…
