Family finance in credit crunch Britain

‘Credit Crunch’, ‘Debt Crisis’ and ‘Interest Rate Hikes’ were phrases dominating the financial news in 2007. Whilst the majority of headlines concentrated on the impact on individuals and markets, Engage Mutual reflects on how family relationships have weathered the financial storm.

Adult Children Relying on Parents for Longer

With increased living costs and difficulties for young people in moving onto the property ladder, children are dependant on their parents for financial support. These children have been dubbed as coming from the BOMAD generation (– relying on the Bank of Mum and Dad), with 46 per cent of parents with children over the age of 25 still supporting them financially and not expecting to gain financial freedom until their 60s. The number of adult children turning to their parents to afford childcare has doubled in the last year (from 11% to 21%), with single parents most likely to do so (29%).

Parents Thinking Ahead for their Offspring

With pressures to save ahead for their children’s future as prices continue to rise and children become more dependent on Mum and Dad, one in two (52%) parents do not give their children pocket money. They prefer to save the money they would give as pocket money and put it aside for the child’s future. And of those who have CTFs for their children with Engage Mutual, those with twins are more likely to pay regularly into their child’s account than those without twins (58% compared to 41%).

Children Having to Support their Elderly Parents

With many having to retire later in life due to high living costs, one in four adult children (25%) are having to contribute towards their parents’ retirement to enable them to give up work and not run into debt.

Young People will Never get out of Debt

Despite money matters putting Britain’s younger generations off tying the knot and flying the nest, today’s under 25’s anticipate buying their first home before their grandparents did. One third of Britons under 25 (34%) anticipate waiting until they are at least 24 before being able afford to move out of their parents’ home. Today’s retirees fled the nest three years earlier at the age of 21.

Under 25’s are expecting to be able to afford marriage at 27.7 years old, three and a half years later than their grandparent’s wed (at 23.2), but in contrast they expect to be able to afford to buy their first home at 28 – nine months before their grandparents set foot on the property ladder, suggesting their readiness to take on debt.

Couples Supporting Each Other Through Tough Times

Despite the alarm over difficult financial issues, the research from Engage Mutual shows that couples will pull together to support each other. 88 per cent of couples would make sacrifices to ensure their partner is financially comfortable, with almost one in three couples (30%) prepared to cut back on luxuries for themselves and just under one in five ready to endure extra hours at work (19%) to keep their loved one in the manner to which they are accustomed.

Karl Elliott, 3GB spokesperson for Engage Mutual Assurance, said: “Over the course of 2007, we’ve seen family relationships strained by money matters. Rising costs in Britain mean that not only do families need to plan ahead financially and carefully manage their money, they are also turning to each other for support. As a mutual society, Engage Mutual, which prides itself on customer engagement, is more aware than most financial providers of the pressures on the modern British family. We are committed to addressing families’ financial needs and have introduced products such as our Junior Easy Save account for children which enables parents to save tax free for children who missed the CTF deadline”.