The “lost generation” has been hit hard by the economic downturn as young adults have struggled to get jobs and make ends meet, so have to rely on their parents more than ever for support, according to research from the fourth annual Scottish Widows Savings & Investment Report.
Adult children are continuing to ‘sap' their parents' savings and investments and, while the average amount being handed out has increased significantly, the number of parents able to give has fallen.
Almost half (47 per cent) of parents with children over 16 have given or loaned money to their adult children or grandchildren; this is a drop of 9 per cent from 2009, but the average ‘Savings Sap' is £13,660 (up from £11,800 last year), revealing those parents able to give are being forced to give more as their children struggle.
The overall saving sap fund has decreased to over £64.3billion2, from £72.53 billion last year.
Many young adults are forced to borrow from their parents just to get by, over a third (35 per cent) are digging into their parents pockets to fund day to day spending and living expenses, compared to nearly a quarter last year (24 per cent)
Over a third (38 per cent) needed the parental handouts to pay off debt and 34 per cent needed the cash for a house purchase.
The immediate effect the saving sap fund has had on parents is also alarming. Eighty two per cent of parents who gave money to family members had to dip into their savings to do so and 54 per cent of these do not think they will be able to top up their savings.
Handing money out to their kids has also led over a fifth (22 per cent) of parents to cut back on day to day spending, one in ten have increased their own levels of debt including mortgaging or remortgaging their property, nearly a third are saving less (31 per cent), and 12 per cent have stopped saving altogether.
If parents didn't have to hand out their hard earned cash, 32 per cent would have been likely to save it toward their retirement.
The research also reveals that over half (52 per cent) of all parents with children aged 16 plus that have already given money to their children are expecting to give again in the future.
This group of parents think that they will have to donate on average another £14,159, over £1,500 more than was predicted last year (£12,564), which on top of the £13,660 they have already given means they are only half way through their “giving cycle”.
However, not all parents are in a position to give their children or grandchildren a helping hand. Nearly a third (31 per cent) of those who have not given any money to their children or grandchildren could not afford to, and 18 per cent had no savings to give.
“Our ‘savings sap’ research highlights the "double whammy" of the recession where children are relying on their parents, “ said Iain McGowan, savings expert at Scottish Widows.
“On the one hand, ‘Generation Y’ is looking ever more to its parents for help as it struggles to get jobs, credit and mortgages - and to clear debt. At the same time, the ‘Bank of Mum and Dad’ is not as readily available as it once was, often for the same reasons.
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