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Home truths for adult children and parents

27 February 2019
  • Nearly half of young adults living at home keep quiet about their savings and debts
  • Just over half of parents charge rent, and the average rent is just £161 a month
  • But most parents and adult children are open about their finances

With the number of adult children sharing the family home with parents at an all-time high, new research from Charter Savings Bank1 shows they are not always quite so good about sharing details on their finances.

The nationwide study found nearly 69% of parents are open about their finances with their adult children and a further 21% would be happy to discuss money with their adult children, but are never asked. Adult children mainly reciprocate with 69% saying their parents know how much they earn.

But when it comes to debts and savings the 26%2 of 20 to 34-year-olds who live with parents – around 3.4 million people – are not as forthcoming. Nearly half (45%) have either debts, savings accounts or both, which their parents are unaware of.

Nearly one in five (18%) have both savings accounts and debts their parents do not know about, while some have secret savings accounts (15%) and others have secret debts (12%).

Adult children living at home are on a good deal, the research shows. Nearly half (47%) of parents do not charge rent for living with them, and the average rent charged by those who do is just £161 a month – a significant saving on average private sector rents.

This reduction in rent is highly beneficial to young adults, as three in ten (30%) admit they would not be able to save for a home if they did not live with their parents. It can, however, be difficult agreeing how much to contribute towards living costs between parents and their adult children, and there are vast differences between families.

Some parents ask for contributions towards food (31%), energy bills (23%), phone and broadband (17%), for example, but a third (33%) do not ask for any contributions at all.

This is at odds with what their children believe they are contributing towards, with 85% believing they put money towards food bills, and a high proportion saying they help parents towards TV and entertainment subscriptions (67%), maintenance (66%) and energy bills (62%).

What parents and adult children say

Bill Percentage of parents who ask for contributions from adult children Percentage of adult children who believe they contribute

Food

31%

85%

Energy bills

23%

62%

Phone/broadband

17%

60%

TV or entertainment subscription

15%

67%

Council tax

13%

49%

Other utilities

8%

61%

Insurance

5%

55%

Maintenance

4%

66%

Car costs/petrol

3%

60%

The study found that, on the whole, children are honest with their parents about general spending, although sometimes this is only because they are asked directly. Just over a third (35%) openly tell their parents how much they spend on gym or health club memberships, and a further 52% would do if asked.

The aspect of their spending that adult children are least forthcoming about with their parents is transport costs, with a sixth (15%) admitting they wouldn’t tell their parents how much they spend on their car, or taxis and Ubers.

Paul Whitlock, Executive Director, Charter Savings Bank, said: “Keeping debt a secret from close family may be tempting, but a problem shared can be a problem halved, as discussing finances may help alleviate stress.

“While living at home, young people have a fantastic opportunity to work towards clearing debt and start saving towards their goals, whether that be buying a property, travelling or further education.

“Saving as much as possible from an early age is a great habit to get into; even a small amount will soon grow. It also means people are used to setting aside some of their income each month, which is good practice for when they move out of the family home.”

1 Opinium conducted research among 2,011 adults living in the UK on behalf of Charter Savings Bank between 22nd – 25th January 2019
2 https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familiesandhouseholds/2017

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Savers are keeping it in the family

07 February 2019
  • One in four are borrowing cash from their nearest and dearest
  • The average amount lent adds up to nearly £1,100
  • And only half always pay the money back

As everyone feels the January pinch on finances, new research from Charter Savings Bank1 reveals many will be relying on family and friends to tide them over. Its nationwide study found that one in four (25%) adults have borrowed from their loved ones in the past year.

The handouts from family and friends are not trivial – the average amount borrowed adds up to £1,093 in the past year. And the money is not always repaid – just 54% of those who borrow cash say they always pay it back.

A quarter (25%) of those who rely on others’ generosity try to pay it back most of the time and 10% say they occasionally pay it back, but 4% admit they never pay it back. Women are better than men at paying cash back – 58% say they always repay family handouts, compared with 49% of men.

Partners and spouses are the most likely to be asked for a loan – 22% of those who borrow say they ask their partner or spouse for cash at least once a month. Around 65% of those who borrow from their partner ask them for cash at least a couple of times a year.

Over a third (36%) of those who ask for money from friends and family borrow from their parents at least twice a year – and it is 18-34-year-olds who are most likely to borrow from them, with 11% saying they ask for money at least once a month.

The study found regional differences in the amount of savings borrowed from our nearest and dearest. Those in the South East are the most likely to borrow money – averaging £1,873 borrowed each year, with those in the East of England least likely to – averaging just £445 borrowed each year.

The research found that of all adults who have asked for money from family at some point – 30% have asked parents and 14% have asked partners or spouses, while a further 8% have asked friends.

Paul Whitlock, Executive Director, Charter Savings Bank, said: “The rising cost of living and squeezed family incomes, particularly at this time of year, can mean that many are increasingly leaning on friends and family to come to their financial rescue.

“In many cases our loved ones are happy to help-out financially, but that can come at a cost, particularly if the recipient isn’t able to pay it back.

“There are many different ways to save; even setting aside what may seem like an insignificant amount each month will see your savings pot grow. Starting a regular savings habit at the beginning of the year will set you in good stead to reach your savings goals for 2019 and leave you less reliant on raiding the savings of others.”

1Opinium conducted research among 2,007 adults living in the UK on behalf of Charter Savings Bank between 20th – 22nd November 2018

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Savings raiders end up ahead

17 December 2018
  • One in eight savers raid their accounts every month, with only one in five always replacing the cash they take out
  • But savers still end up ahead for the year with average deposits of £2,906 beating average withdrawals of £924
  • Big ticket items like cars or holidays are primary motivators for driving saving behaviour

New research from Charter Savings Bank1 reveals that one in eight (12%) regular savers usually take money out of their accounts every month – and the number of savings raiders is set to grow as festive spending puts finances under strain.

Despite their best intentions, 12% of savers – the equivalent of six million people across the UK – dip into their savings every month, and over two thirds of adults (72%) say they make a withdrawal from their saving accounts at some point during the year.

Over the course of a year, savers estimate they withdraw about a third (32%) of their cash, although one in five (21%) admit to taking out at least half of their total savings. Just one in eleven (9%) say they never touch their savings.

But while we are almost all savings raiders to some extent, the study found we do at least try to put the money back. Just one in five (18%) of those who take cash out of their savings pot always replace it, while 43% try to do so. Around 15 per cent admit they replace cash rarely at best.

The average amount saved over a year is £2,906 and the average amount withdrawn over this time is £924. Men are able to save more over a year than women (£3,344 compared to £2,476), and just over a fifth (21%) of men will always replace their savings compared to one in six (16%) of women.

Charter Savings Bank’s study found interesting differences in the reasons driving people to withdraw money from their savings, with some only doing so when they need cash for a big-ticket item like a holiday or car (30%), while others say they mainly take money out when they need it for unexpected bills (27%) or in an emergency (25%).

Main reasons people raid their savings

Event Percentage of people who take out savings due to this reason

When I need money for a big-ticket item like a holiday or car

30%

Whenever I have unexpected bills like home or car repairs

27%

Only in an emergency

25%

Usually each month when I run out of money

12%

When I have reached my savings goal

6%

Paul Whitlock, Director of Savings, Charter Savings Bank, said: “There are many different types of savers in the UK and there is no right or wrong way to save. Anyone able to set aside some money each month, whether they are saving up for a specific item or just in case of emergency, is doing well.

“Saving as much as you can afford to is extremely worthwhile. It may seem pointless putting small amounts of money aside but it is extremely satisfying to see your savings grow. Christmas is an expensive time of year but a good time to start thinking about your savings goals for 2019.”

1 Opinium conducted research among 2,007 adults living in the UK on behalf of Charter Savings Bank between 20th – 22nd November 2018

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Your 30s are your savings peak

19 November 2018
  • Thirtysomethings are the most disciplined savers, putting away nearly 60% of their disposable income per month
  • And it’s older generations who are the big spenders, saving just over a third of their income
  • But more than one in 10 have never opened a savings account, rising to one in five in their 20s

Click here to view.

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UK Grandparents worth £5 trillion

27 September 2018
  • Grandparents’ total net worth adds up to £5 trillion or £350,634 each
  • Majority of grandparents say their kids will be better off than them when they reach the same age
  • Grandparents hold an average of £29,725 in bank and savings accounts

New research from Charter Savings Bank1 shows grandparents are collectively worth over £5 trillion – the equivalent of £350,634 each – and expect their children and grandchildren to be as well off as them when they reach the same age.

Despite owing much of their wealth to being part of the property-owning generation the study found 52% of grandparents believe that their children will accumulate more wealth than them compared to a quarter (25%) who think the younger generation will be worse off.

Grandparents acknowledge that they are worth more now than their parents were at the same age; over half (56 per cent) believe this to be the case versus a quarter (25%) who think they’re worth less now than their parents.

In a sign of how many pensioners are sharing their money with younger generations during their lifetimes, four in ten (40%) grandparents are either already gifting cash to their children and grandchildren or plan to do so. Three-quarters (74%) and half (50%) of grandparents plan to pass down their wealth to their children and grandchildren respectively.

The main source of grandparents’ wealth is their home worth an average of £225,623 which accounts for almost two-thirds (64%) of the value of their assets. Their pension pots (£32,652), investments (£32,013) and bank savings (£29,725) are the other major sources of wealth.

Grandparents are not entirely debt-free – around one in five (19%) still have mortgages on their main home and one in three (32%) owe money on loans and credit cards. On average, they have £14,810 in liabilities predominately due to outstanding mortgages of £11,130 with £2,211 in unsecured debt through loans and credit cards.

Paul Whitlock, Director of Savings, Charter Savings Bank, said: “Baby boomers may be the richest generation ever, but they are optimistic that their families will in time be better off than them. This may be difficult to believe for millennials struggling to reach the property ladder but much of their grandparents’ wealth will eventually find its way to them either through gifting or inheritance.

“While houses are the biggest source of wealth, the savings accumulated by the average grandparent almost match the size of their pensions and investments, demonstrating the role that a healthy savings habit plays in any balanced portfolio.

“Whether you are lucky enough to be expecting to inherit all or part of your parents or grandparent’s wealth or not, it’s important for people of all ages to make regular cash savings and seek out the best rates to live the lifestyle you aspire to have in later life.”

1 Opinium conducted research among 2,007 adults living in the UK on behalf of Charter Savings Bank between 22nd – 26th June 2018

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Multiple Cash ISAs don’t add up for savers

24 May 2018
  • One in five over-55s have five or more Cash ISAs but half don’t know how much they have saved
  • Charter Savings Bank’s Mix & Match ISA enables customers to open as many Cash ISAs as they want within one wrapper

New research from Charter Savings Bank reveals multiple Cash ISAs are not adding up for savers, who are risking leaving their money to stagnate in low interest rate paying accounts.

Its study found one in five (19%) of savers aged 55 plus have five or more Cash ISA accounts, but less than half (48%) know exactly how much is in these accounts and actively check and manage their savings. Women over 55 are more aware of the amount they have in savings than men (54% compared to 44%).

The amount of money sitting in low interest rate paying accounts is substantial. A fifth (20%) of those who don’t know how much is in their Cash ISA accounts, estimate that they have between £10,000 and £30,000 sitting in them. An average of one in seven (15%) estimate that they have more than £30,000 in inactive accounts, of which 18% are women compared to 13% of men.

Over a third (36%) of those who have opened more than one ISA, did so because they had different rates. For others, however, the number of ISAs they hold has increased because they’ve opted to open a new account each tax year.

Charter Savings Bank is offering more choice with its Mix & Match ISA, enabling savers to open as many different types of Cash ISAs as they want within one wrapper, and is using the industry’s eISA system to ensure most savers switching providers will benefit from a fast transfer.

Reasons for holding multiple Cash ISAs

Reason Over-55s with multiple ISAs for this reason

ISAs have different rates

36%

The number has built up as I have tended to choose to open a new ISA account for each new Tax Year

27%

ISAs have different product features

26%

I forgot I had some

5%

Too complicated to transfer them to one provider

2%

One of the reasons savers over the age of 55 do not have multiple ISAs, is because it can be difficult and frustrating managing multiple accounts with different providers. Nearly three in ten (28%) find it annoying managing different rates, while a similar number find managing multiple fixed-term maturities frustrating.

Around a quarter (24%) do not like managing the administration side of multiple accounts and remembering various log in information, while two in five struggles to remember bonus expiry dates (22%) and different notice periods (21%).

Charter Savings Bank’s research found 59% of savers would like the option to split their savings across a range of different accounts to suit their needs.

Paul Whitlock, Director of Savings, Charter Savings Bank says: “It can be easy for savers to lose track of accounts once they’ve been opened, and the longer they’ve been open the more likely it is that something might have changed. Savers could be missing out on better returns if they forget about their accounts. 

“With ISA allowances increasing over the years, it’s possible for savers to have substantial deposits in them so it makes sense to take action. It’s easier than ever to transfer Cash ISAs and so it makes sense to make the most of the simplicity to bag a better rate.

“Our Mix & Match ISA enables customers to split their allowance among different types of accounts so they can fix the rate on some of their ISA allowance while leaving the rest in easy access, all with highly competitive rates.”

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Financial Services Compensation Scheme

Financial Services Compensation Scheme

Your eligible deposits with Charter Savings Bank are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit protection scheme. Any deposits you hold above the limit are unlikely to be covered. Please click here for further information or visit www.fscs.org.uk.