Hatching plan for new nest egg

The Scottish Friendly Family Finance Tracker revealed that Gen Z has to rely on a wider mixture of friends, partners, and charities to branch out on their own than Baby Boomers and Gen X ever had to do.

It revealed that 14 per cent of Gen Z adults relied on money from their grandparents to help them leave home, 17 per cent had to rely on government benefits, 10 per cent got help from siblings and 7 per cent got help from a charity. This compared to just 3 per cent, 6 per cent, 2 per cent and 1 per cent respectively for Gen X. Some 40 per cent of Gen Z adults are still living in the parental home, compared to 5 per cent of Millennials.

Scottish Friendly said that house price affordability is at its lowest level since the financial crisis in 2008 and the monthly mortgage payment is now close to half of an average earner’s gross salary.

It said that, whether someone wants to buy or rent, the cost of flying the nest is considerable – and it’s changing the dynamics of family life.

Scottish Friendly wanted to better understand what people’s different experiences had been of gaining their independence as young adults. It is now asking what more could and should be done to ensure future generations can afford to leave home.

Scottish Friendly Family Finance Tracker questions were put to a range of adults, from Baby Boomers to Gen Z-ers. Grandparents were asked about themselves, their grown-up children, and their grandchildren. Questions were asked of parents whose children had left home, and those whose children were still living at home.

The research found that 43 per cent of parents in the UK said that they gave their child or children money to help them move out. Parents reported their children were also given money from their grandparents and other relatives.

Half of parents asked said their children were given financial assistance from family and 30 per cent said the children used their own savings.

Partly to help people afford to move out of the parental home and give young adults more choice, Scottish Friendly is proposing a change to rules on Junior Individual Savings Accounts (JISAs) to let more family members step up to help build a nest egg.

Its research found that if UK adults had access to a nest egg of £32,000 when they entered adulthood, many would have used it to help them gain independence. A third said they would have put the money towards a house deposit. This jumps to 44 per cent for Baby Boomers. Meanwhile, more than a fifth would have saved or invested the money, compared with 31 per cent for Gen Z and 26 per cent of Millennials.

Kevin Brown, Scottish Friendly savings expert, said: “The fact that, given the chance, four out of 10 people would have sought to improve their housing situation and a further 22 per cent would have saved or invested the money just goes to show how life-changing a lump sum could be in setting young adults on a path of greater independence and improved financial resilience.

“We need to start trusting young adults more to act in their own best interests. Just look at the number of Gen Z who say they would have invested the money.”

Scottish Friendly is lobbying the UK government to get behind its campaign to change the rules to allow extended family, in particular grandparents, to open a JISA on behalf of a child, should the parents or legal guardians not have the time or financial means to do so themselves.

As it currently stands, only the child’s parent or legal guardian is allowed to open an account.

The mutual believes the change it is proposing to the rules could help many more children enter adulthood on a firmer financial footing.It is now compiling evidence that shows clear appetite among parents for the rule change, as well as a growing willingness amongst UK adults to help out.

According to Scottish Friendly, 52 per cent of mums and 46 per cent of dads would like to see extended family and friends allowed to open a JISA on their child’s behalf. Just 5 per cent of UK parents say they wouldn’t want anyone other than the child’s parent or legal guardian to be able to open a JISA.