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Christie HardingApr 17, 2023 11:45:18 AM

The "Bank of Mum and Dad" & How you can support your family

The “Bank of Mum and Dad” is a term used to describe parents who provide financial assistance to their adult children and with the cost-of-living crisis and inflation playing havoc on so many people’s lives, more and more young people are reaching out to their family to get by. 

Research by Saga[1] in 2020, showed that 1 in 5 parents said they were helping their adult children financially, in 2022, this increased to 1 in 4.

64% of those parents researched, also expected the current cost-of-living crisis to have a greater impact on their adult children’s finances than the COVID-19 pandemic due to rising bills, increasing rent and mortgage payments and due to this, a lack of accessible savings.

The events of the 2020’s so far, has also resulted in many over 50s re-evaluating their inheritance plans, to be able to support their family further. The same research shows that:

  • 1 in 4 (24%) say the cost-of-living crisis has changed how they plan to share their estate with their family – rising from 21% during the pandemic.

  • 12% of over-50s gifted away money during the Covid-19 pandemic, with 15% now expecting that they will do so at some point during the current cost-of-living crisis – an average of 9% of their estate.

  • Over a third (34%) also say they are now more open to different types of inheritance, with the same proportion highlighting that they want to see their children benefit from it before they die.

Given these statistics, it is a fair assumption that more and more people over the age of 50, will seek advice on how they can support their children and grandchildren.

But what are the options for family members who are in a strong financial position and wish to support their family during times of volatility like these?

Help with housing costs

Housing is one of the biggest, necessary expenses that adults face. In the English housing survey 21-22[2], it was highlighted that of the 4.6 million households that rented privately, 19% spent a third of their household income on rent. By January 2023, private rental prices had increased by 4.4%.

Depending on your financial situation, you might be able to offer a loan or a gift to help with the costs of a deposit for a mortgage. Alternatively, with the rental increases rising so prominently, you could offer to let them live with you for a short period to give them an opportunity to save money.

Offer financial assistance

If you're in a position to help, offering your adult child financial assistance can add a much-needed layer of reassurance during stressful times. This could be in the form of a no-obligation gift, such as lump sum to cover bills or living costs, or it could mean contributing to their rent or food bills on an ongoing basis.

It is worth highlighting, that however generous and honest your intentions are when wanting to support a family member, assistance can sometimes strain relationships in unexpected ways or create unrealistic expectations in the dynamics of your relationship with loved ones. Make sure to have an honest conversation with your family member about what you're able to do and set clear boundaries to avoid any misunderstandings. This is particularly true, where you are offering a loan, rather than a gift.

Help with budgeting

One of the biggest challenges for young adults is learning to manage their finances effectively, as there is little education offered in schools.

Offering to sit down with your child and help them draw up a budget can be a great way to help them take control of their finances.

You could also help them research ways to save money, such as switching energy suppliers or shopping around for the best deals on groceries.

Here’s an example budget that we have put together, to demonstrate the value of identifying all outgoings.

Monthly Income: Monthly Expenses: Net Income:
Salary: £2000 Utilities: £120 Total Income: £2200
Other Income: £200 Food: £250 Total expenses: £1870
  Transportation: £100  
  Personal Care: £50  
  Entertainment: £100  
  Debt payments: £150  
  Savings: £200  
  Other expenses: £100  
Total Income: £2200 Total Expenses: £1870 Net income: £330















Remember that this is just an example budget, and your own expenses and income may differ. Be sure to tailor your budget to your own needs and priorities, taking into account any life changes and milestones that may require you to review and adjust, to remain effective and relevant.

Provide emotional support

The cost-of-living crisis can be a stressful and demoralising experience for young adults. As a parent, offering emotional support can be just as important as offering financial support. Simply being there to listen and offer advice can help your child feel more supported and less alone. Take advantage of communication technology that is free and protects your data.

Encourage them to seek help

There are a number of organisations that can offer support to young adults who are struggling with the cost of living. Encouraging your child to seek help from these organisations can be a great way to give them the support they need. For example, Citizens Advice can provide advice on a wide range of financial issues, while StepChange offers free debt advice.

Before offering any financial support to your adult children, it's important to consider your own financial situation. If you do decide to offer financial assistance, make sure that it is within your budget and won't impact your long-term financial goals.

Seeking financial advice yourself, will put you in a better position to ensure you can still save for the retirement you want, while feeling secure in the knowledge your children and grandchildren are also financially stable.

Seeking advice is often more cost-effective than people think and will help you to better understand how attainable your goals and objectives are. If you already have a Financial Planner that you use, then you will understand just how valuable they are, if you don’t yet have an adviser, get in touch with us today and we will connect you with a reputable Planner in your local area. 

01565 658840




Christie Harding

As a Marketing Assistant for the ASHL community, I am pleased to be able to provide content to our members and to the wider UK audience.