The age-old notion of the ‘bank of mum and dad’ may soon be a thing of the past. A new study reveals a trend of financial independence among the youth in the UK, challenging traditional expectations and possibly reshaping the financial landscape for future generations.
Key Insights:
- UK children are becoming increasingly financially independent, potentially making the ‘bank of mum and dad’ obsolete.
- Over half of UK parents are struggling to financially support their kids’ future.
- Gen-Alpha and Gen-Z are on track to be among the most financially empowered generations.
- Many young individuals don’t expect parental support for life milestones like weddings, houses, or education.
- Children’s savings have seen a substantial 145% increase year-on-year.
- Over 40% of UK children are actively planning their financial future.
- Youngsters are also considering their parents’ futures, with some saving to support them.
Youthful Financial Independence
GoHenry’s Youth Economy Report offers a fresh perspective on the financial habits of UK kids. This research indicates that both Gen-Alpha and Gen-Z may soon rise as some of the most financially self-sufficient generations.
This is encouraging as recent studies have shown a low level of financial literacy within society.
Shifting Expectations: Self-reliance Over Parental Aid
While parental instinct drives a desire to financially support offspring, this isn’t always reciprocated by the youth. Surprisingly, 19% of those aged 16-18 don’t anticipate any financial aid from their parents.
Financial Milestones: A Youth Perspective
When looking at specific life milestones, almost three-quarters of young people (74%) don’t expect parents to help pay for a wedding, 72% don’t expect parents to help buy a house and 64% don’t expect parents to help foot the bill for the cost of education, such as university, training or an apprenticeship
| Milestone | Percentage Not Expecting Parental Help |
|---|---|
| Wedding | 74% |
| House Purchase | 72% |
| Education (University, Training, Apprenticeship) | 64% |
The data speaks volumes: UK kids are not just relying on wishful thinking. Their savings have skyrocketed with a year-on-year increase of 145%. On average, each child saves £61.03, which breaks down to £5.09 monthly and £1.17 weekly.
Young Savers in Action
Theo, an 8-year-old from Doncaster, shares his financial journey: “I’m inspired by ‘Homes under the Hammer’ and have set my eyes on buying a council house. With my GoHenry app, I’ve managed to save £75, all from my pocket money and little tasks around the house. I believe in starting early so that I’m prepared for the future.”
Planning for the Future
Children aren’t just saving; they’re planning. Over 40% of UK kids are thinking about their financial independence and making plans for specific purchases and aspirations.
| Aspiration | Percentage of Kids Planning |
|---|---|
| House Purchase | 35% |
| Driving Lessons | 39% |
| Holiday | 34% |
| Moving Out | 32% |
| University | 30% |
These kids aren’t only dreaming; they’re acting on it. A striking 43% of teens aged 16-18 have part-time jobs, earning an average of £79 weekly.
Kids are Helping Parents
The financial ambitions of these young savers don’t stop at personal goals. Nearly a quarter plan to save for their parents, aiming to aid them in holidays, cars, or even house purchases. Impressively, the average savings towards this noble cause stands at £1,872.25 per child.
The financial landscape is shifting with the youth leading the charge. Their proactive approach towards savings, combined with a mindset of self-reliance and financial independence, paints a promising picture for the future.
This is underlined by Louise Hill, Co-Founder and CEO of GoHenry who said: “While the bank of mum and dad will always exist, it’s clear that the younger generations are changing the nature of what parental lending might look like in the future. Our insights show that children as young as six are already saving for live events. Coupled with their increased earning power, Gen Z and Gen Alpha look set to be a financial force to be reckoned with.”