What challenges do young adults face?
Before you can help your adult children, you must first understand their challenges. Government consultations on the issues facing young people include statistics for children between 16 and 24, many of whom will likely still be at school. However, many issues adult children face also apply to younger teenagers.
Young adults in the UK are more likely to report physical and mental health issues. The annual Health Survey for England identified an increase in obesity-related illness and mental health issues among young adults. Young adult children are also more likely to be victims of crime and face unemployment, poverty and homelessness.
The ability to buy a home is also an issue. In 2016, PriceWaterhouseCoopers described 20—to 39-year-olds as 'generation rent', and the English Housing Survey found that the proportion of first-time buyers aged 16-24 had fallen from 21.3% to 7.5% between 1995/96 and 2015/16. The average age of a first-time buyer in the UK is now 33.
8 ways parents support their adult children
As you can see, adult children's challenges are complex and wide-ranging. Most parents want to continue supporting their adult children, whether they're at home, at university, or starting their careers.
You can offer your children help and support throughout their adult lives in various ways. Some involve a financial investment, while others are free. Fostering a supportive relationship is a great start and lets you help your adult child while enabling them to keep their independence.
Your adult child may have values that differ from yours and will make their own decisions about how to live. Helping your adult child means keeping an open mind about their life choices. As the parents of a young child, you likely had more control over your child's life, even when they were toddlers seeking to assert their free will. It's natural that they become more independent as they grow, but that doesn't mean you can't still be a supportive influence and offer emotional support.
When adult children remain overly dependent on their parents, they struggle to live independently and may lack basic skills such as preparing meals or managing their finances. Setting healthy boundaries lets you offer support while they find their own way. You can also encourage them to talk about their career goals and take steps to work towards them.
Financial education has been part of the national curriculum since 2014, meaning current generations will hopefully be more financially literate than previous ones. If your adult child hasn't benefitted from financial education, you can start the process at home.
Talking about budgeting and openly discussing household finances can help them learn how to calculate their income and outgoings and understand which expenses are essential. You can also start a conversation about saving for planned purchases and emergencies and ways to avoid unnecessary debt.
Many banks and charities have financial education programs for young people and adults. Martin Lewis has also funded free textbooks covering financial topics for adults, which you can download here.
As the average age for first-time house buyers increases, it's more likely your adult child will continue to live with you. In the 2021 census, the number of adult kids living at home had risen to 3.8 million, an increase of 13.6% compared to the 2011 census.
If your adult child lives with you because they're a student or unemployed, you might be reluctant to ask them for a financial contribution. However, asking them to contribute to household expenses can help them gain independence. If this isn't practical, they can learn valuable skills by carrying out household tasks. Clear communication is vital so your child understands why they're being asked to contribute and your expectations. The best approach is to work together to come up with a plan so everyone's on board.
The "Bank of Mum and Dad" has described how parents support their grown children for years. Legal & General now call it the "Bank of Family", as their research suggests contributions now come from the extended family as well as parents. 47% of homes bought by people under 55 will have been partly funded by parents or other family members, with average contributions expected to reach £25,600, or £8.1 billion in total, an increase of £2.8 million since their research began in 2016. Housing affordability has worsened in England and Wales over the past 25 years; employees in full-time work can now expect to pay 8.3 times their annual income to buy a home.
This could mean that an adult child whose parents can't afford to contribute won't be able to buy a home. You can help your adult child buy a home in two main ways if you're financially able.
Gifting a deposit
If you have savings, the simplest way to help your child could be to gift or lend them a deposit. Most mortgage lenders ask for a minimum 5% deposit, but more is better. The higher your child's mortgage is, the higher the risk they'll default. The mortgage company will calculate the loan-to-value rate (LTV) and typically offer a better deal to customers with a lower LTV. For example, if your child buys a £250,000 house with a £25,000 (10%) deposit, they fund 90% of the house with a mortgage, making the LTV 90%. If they can increase the deposit, the LTV drops, which could give them a much better interest rate, meaning they spend less overall.
A mortgage lender will need documents to prove the money is coming from you and is either a gift or an interest-free loan to comply with anti-money laundering regulations. You'll also need to confirm you won't own a share of the property. It's also worth remembering that your children could pay inheritance tax on the gift if you die within seven years.
Mortgage support
If you don't have the funds to gift a deposit but are otherwise financially stable, you can help your child get a mortgage.
Acting as a guarantor involves putting down money or property as collateral. The main disadvantage is that it makes you financially responsible if your child defaults. This type of mortgage typically also has higher interest rates.
A joint mortgage means you co-own your child's home and pay towards the mortgage. This is ideal if you have a regular income, but it can mean paying additional stamp duty if you already own your own home. A joint borrower sole proprietor mortgage works similarly, but your child will be the only named owner, avoiding extra stamp duty. This option may not be suitable for older parents.
Finally, if you already have a mortgage, consider remortgaging to give your child a lump sum. It's vital you get financial advice before doing this, as it will increase your monthly expenses and could impact your retirement plans.
Recent figures show that 1.8 million people owe more than £50,000 in student loans, with the highest on record reaching £252,000. Students pay 9% of everything they earn over £27,295, but with interest rates at 8%, there are fears that many students will never repay the total amount, which could negatively impact their lives.
However, if your children want to go to university or enter a profession that needs a degree, you can help. Good financial education is a great starting point. Look carefully at universities and consider their fees and accommodation costs to help you set a savings goal. UCAS has helpful guidance on reducing costs and increasing income so your child can avoid taking a full loan. Some universities offer grants and bursaries. For example, Cambridge University offers a scholarship sponsored by Stormzy to black students. Other universities have scholarships based on subject or to mature students.
29% of parents born between 1965 and 1980 financially support their adult children. We've mentioned help buying a home, but research suggests parents' contributions now cover daily living costs or clear debts. 46% of parents surveyed said they were worried about the impact on their finances.
If you plan to help your grown children with bills or debts or contribute to a particular purchase, review your finances first. Regularly reviewing your outgoings is a good idea, as you could get a better deal on everything from your mortgage and utility bills to insurance premiums. The process will give you a clear idea about how much you can afford to give your children.
You can help your children in other ways, such as helping them with budgeting or signposting them to other resources and support.
The Mental Health of Children and Young People in England Report 2023 found that 23.3% of 17-19-year-olds and 21.7% of 20-25-year-olds had a probable mental health disorder. Mental health issues in young people rose between 2017 and 2020 and have remained at a similar level since. You can encourage your child to talk about their problems and build resilience. Young Minds has useful resources for adult children and their parents. You can learn how to help your child and when they may need professional help.
Often, the best approach is to offer a listening ear. You can guide your child without trying to solve everything for them. Their views and beliefs may differ from yours, so it's vital you offer emotional support without judgment.
Health insurance
Health insurance provides access to private treatment, including mental health support. Family health insurance costs less per head than individual policies. The mental health support a policy offers depends on your chosen coverage level. Most basic policies include 8-10 counselling sessions. You can add extended coverage to include additional therapies and in-patient treatment.
The right policy for you depends on the child's age and whether they live with you, so speaking to a broker will help you consider your options.
Supporting adult children can be taxing, so it's essential to look after yourself as well. Talk to friends and do things you enjoy to maintain your mental and physical health. You want to help your children, but you can set healthy boundaries and say no to encourage them to become more independent. This will also set an excellent example for your children to care for themselves.
Getting professional advice
We hope this guide has helped you learn more about ways to support your adult children. If you'd like to explore how health insurance can help you look after your family's well-being, contact us for a comparison quote. We'll connect you with a regulated broker for tailored advice.
