Just over half of all adults aged between 21 and 35 have asked their parents for financial support in the past two years, new research has revealed.
Along with money for big items such as a wedding and a house deposit, parents are have also paid for groceries, holidays and new clothes.
Meanwhile 26 per cent of adults in this age group have moved back home with their parents in order to save money.
One in four adults aged between 21 – 35 have moved back in with their parents
Of those who have moved back home in order to save money, 84 per cent said they are regularly putting money into a savings account of an average of £205 per month.
Savings goals for this group include buying a home, prioritised by 34 per cent, clearing debts, put first by 19 per cent, and going travelling, which 13 per cent said they are saving for, according to the research from Experian.
Just over half of the 2,000 people questioned said they had received financial support from their parents over the past two years.
These respondents weren’t living at home yet 18 per cent said their parents had paid for everyday essentials such as the weekly supermarket shop.
As many as 13 per cent have been taken on a spending spree to buy new clothes, and 18 per cent had been given money to go on holiday.
When it comes to big ticket items, 9 per cent had been given money towards a wedding or a honeymoon, 7 per cent had been given a deposit for a new house which they didn’t have to pay back, 7 per cent had been given money to pay off a loan and 8 per cent had been given money to buy a new car.
A smaller percentage of parents had given their child money for a house deposit which they had to pay back, or had given them money to pay their mortgage.
James Jones, head of consumer affairs at Experian, comments: ‘The Bank of Mum and Dad is a financial institution that is becoming increasingly important, especially when it comes to purchasing a property.
‘However, our research shows that this dependence on parents by young adults goes beyond just big one-off expenses and stretches to everyday essentials. This has implications for both the youngsters’ and the parents’ financial futures, particularly if the parents’ finances become squeezed.
55 per cent of millennials have received financial support from their parents in the past 2 years
‘Whilst receiving help from parents is perhaps necessary for many, I urge young people to also be conscious of building a positive financial profile. For example, remaining on track for repayments such as credit cards, household bills and mobile phone contracts.
‘Even when times are tight, saving little and often can make a huge difference in achieving long term financial goals.’
The average sums of money being handed over by parents for house deposits vary considerably yet a recent report from Nationwide said parents hand over an average of £18,000.
It also said parents were behind more than one in four house sales this year, with parents amounting to the equivalent of a £5.7billion mortgage lender in terms of cash doled out.
However, there are major discrepancies in the amount handed out across the country with sums ranging from an average £10,800 in Scotland and £12,000 in the North East, to £21,700 in the South East and £30,600 in London.
For a full list of alternatives if your parents aren’t in a position to hand over a wad of cash, see our article on the alternatives to the Bank of Mum and Dad.
First-time buyer saving schemes: What you need to know
Help to Buy Isa
You can save up to £200 a month into your Help to Buy Isa and in your first month, you can deposit a lump sum of up to £1,200.
The minimum Government bonus is £400, meaning that you need to have saved at least £1,600 into your Help to Buy Isa before you can claim your bonus. The maximum is £3,000 – to receive that, you need to have saved £12,000.
The Lifetime Isa pays a cash bonus worth up to £1,000 a year for every £4,000 saved. You need to be aged between 18 and 40 to open one, and you can only touch the money to buy a home, or else face a stiff 25 per cent penalty on any withdrawals before you hit the age of 60.
You can keep your money in cash, or put it into stocks or investment funds, as with other Isas.
Your savings and the bonus can be used towards a deposit on a first home worth up to £450,000 – and the deal allows two first-time buyers each to earn bonuses then pool their resources to buy a home.
If you opt to invest your Isa, remember you will need to factor in any fund and platform fees. You must also take into account that market volatility means the value of your pot can go down as well as up.
You can read more about investment Isas, and how to pick the best one for you in our round up here.
Don’t get hit by tax
If you withdraw your money from the Help to Buy Isa and do not use it to buy a home, you will benefit only from the interest payable on the account.
If you withdraw any of your money from a Lifetime Isa before you are 60 and do not spend it on the deposit for your first house purchase, you forgo the Government bonus AND you will have to pay a 25 per cent levy on the full Lifetime Isa balance.