Lack of financial education leaves over half of young adults needing parental help for living costs

It has been found that 35% of 35–44 year olds receive regular financial aid from their parents, with 24% saying they could not afford their lifestyle if it weren’t for the cash injections and pointing to lack of education at an early age as a source of the problem.

The study, conducted by Guarantor Loan Comparison and featuring respondents from 147 educational institutions and UK companies, announced the results of the 18–44 year olds Financial Insights Survey.

Part of the survey asked young adults aged 18-20 which financial topics they struggle to understand – such as budgeting, credit scores, and mortgages – and how much of these they rely on parental support.

It found that 67% of 18-20 year old respondents felt that mortgages were the top priority for needing parental support, while credit scores and budgeting was chosen by 17% respectively from the same age group.

It seems that mum is definitely the word when it comes to educating on financial matters. Compared to the male parents that were surveyed, women were far more likely to talk to their adult children about a number of topics, including:

• Credit scores – 63% of mums said they would discuss this with their adult children, but only 27% of dads said the same
• Debt – 70% of mums were happy to talk about this, as compared to 59% of dads
• Budgeting – 78% of mums would talk budgets, opposed to 41% of dads

But when it comes to the financial education of the next generation, parents are united. The vast majority – 78% – said that they as parents were responsible for teaching children about money matters, although 73% also felt secondary schools had a significant role to play. In addition, 35% of parents believe that the government should be raising the levels of financial responsibility amongst children.

Parents and the property ladder

The so-called Bank of Mum and Dad – often referenced in relation to the housing market – is still very much alive and well in property terms, with the study finding young people calling on the direct and indirect assistance of their parents to help them get on the housing ladder.

In the past year 26% of 18–44 year olds have had parental help with a housing deposit and 13% received a rent or mortgage contribution – but even more have received financial help in terms of increasing their own savings. 

Over the past year, 39% of parents with children over 18 have allowed them to live at home without paying any rent. Although most of these are under 20, the survey reveals that 5% of 25–30 year olds are still living in the family home, rent-free. With no housing costs or bills to pay, this means they can start to build up a property nest egg of their own. 

The top areas that parents provide financial help are:

• 55% of 18–44 year olds have had parental financial help with monthly bills, including gym memberships and phone contracts
• 51% have had financial help with food shopping 
• 33% have received parental aid towards their car finances 
• 18% have received a contribution towards their holiday costs