Teenage dreams turn to adult nightmares

Parents are increasingly finding themselves making life-changing decisions to give their children any chance of avoiding financial disaster in early adulthood.

And these parents could face a bleak financial future as their children try to make the transition to adult life, according to the first annual Coming of Wage Report. The report found that there has been a massive societal shift in the cost of becoming an adult today and that parents, in particular, are being hit by this change.

According to the report, with record numbers of students going to university and skyrocketing house prices, many of the UK’s teenagers simply can’t become financially independent adults on their own. Their parents are being put under financial strain like never before, with their offspring expecting them to bankroll their future and warning that they won’t be able to get on to the housing ladder without parental help.

The real cost of living at university, the shock of realising the minimal difference between salary and outgoings in their first jobs, and the cost of buying a first home are the real hangover being experienced by the country’s 18 to 25-year-olds.

Four times more teenagers now head to university than 30 years ago, and they are being forced to cover the costs of their higher education aspirations. The average graduate leaves university laden with a £12,000 debt and little hope of paying it off.

Even worse, with house deposits rising more than 450% in 10 years, getting a foot on the property ladder is almost impossible for young adults, leaving 40% of today’s teenagers despairing that they will ever be able to afford their first home without financial help from their parents. The effects are already being felt, with the number of first-time buyers in the UK dropping 20 per cent in the last year and the average age of the first time buyer rising to 34.

The financial epidemic continues to spread, with many parents being forced to dip into their savings or raid their pension funds to help cover their children’s big bills. What’s more a staggering 95 per cent expect to still be funding their children even after they have left home.

The Coming of Wage Report, commissioned by The Children’s Mutual and conducted by the Social Issues Research Centre (SIRC), reveals that there is very little good news for today’s teenagers and parents as the cost of living leaps dramatically at age 18.

It rockets from a UK average of around two per cent to 6.22 per cent for students at university, based on a typical ‘university shopping basket’ which includes fees, rent, travel, food, clothing and leisure.

The report revealed that the biggest shock for graduates was when they got their first full-time job. “It was part of the ongoing parental commitment to provide support during higher education. Once you had left college, however, you were expected to ‘make it on your own’,” the report said. Rent and utility bills were the greatest shock although there were many other “hidden” costs of emerging adulthood, for both students and young workers, for example an average deposit on a house or advance rent for a bedsit or flat.

The report found that graduates were reluctant “…to believe that the end of university meant that you were now ‘grown up’ and should therefore be leaving the parental ‘nest’. Instead there was a general feeling that this was an ‘interim’ period and that you could still count on parental support.”

David White, Chief Executive of The Children’s Mutual, said: “Parents of 18 to 25-year-olds, are staring right in the face of a real financial headache with little to do but find the least painful solution to the problem. But parents of younger children still have a chance.

“For many parents with children aged 13 or over, it may be too late to cover the cost of higher education but there could still be at least 10 years before buying a first home will head onto the agenda. Parents with children aged between five and 13 could still have enough time to stop a potential financial train crash heading towards them - for example by saving on a regular basis over the long term.

“The parents who have the biggest chance of making a difference are those with Child Trust Fund children. They have been given the catalyst to help them save. And by engaging now and saving a little, often, they could help to avoid the financial conundrums being faced by the parents of today’s young adults.”