Credit, Collections & Insolvency News
New findings from the HL Savings & Resilience Barometer in July 2022, produced with Oxford Economics have found that the higher the level of education your parents reached, the more likely you are to have money.
The research found that 69% of those whose father went to university have enough cash at the end of the month to be resilient – compared to 46% of those whose father left school before they were 15.
The children of those whose fathers didn’t work when they were teenagers are less likely to have enough savings (52% compared with 62% overall ) or surplus earnings (44% compared to 51% overall), or to have bought a home (25% compared with 34% overall) or saved enough into a pension (24% compared with 34% overall).
The children of renters are more likely to rent (18% own their own home compared to 46% of those whose parents had a mortgage).
Whilst the children of self-employed people are both more likely to have savings (69% for those whose dad was self-employed, and 70% where mum was self-employed compared to 62% overall) and less likely to have affordable debts (23% where dad was self-employed, 19% where mum was and 30% overall).
Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown said “There’s no asset more valuable than having parents with money, but the HL Savings & Resilience Barometer demonstrates that the impact your parents have on your financial life isn’t just about the cash they can pass down the generations. Everything from them having a job to studying beyond the age of 16 and owning their own home also helps boost your own financial resilience in adulthood.”
“Those whose parents are better off tend to have better incomes than those whose parents are on lower incomes. This we already knew, because social mobility doesn’t tend to shift quickly. OECD figures that show it would take five generations for those born in low-income families to approach the average income in their society.”
“Some of the parental measures in the Barometer tend to be heavily correlated with having enough money – like whether your parents owned their own home outright or with a mortgage when you were a teenager, whether they stayed at school after the age of 16, and whether they worked. Unsurprisingly the offspring of those who owned a home and worked are more likely to have more savings, enough cash in their pension, and a home of their own. ”
“We can’t underestimate the impact it has when parents pass on money. The Bank of Mum and Dad can help finance further education in a way that makes it feel more realistic, and they can provide a deposit to get their children onto the property ladder. However, the impact goes beyond the money itself. Having parents with enough money also offers an element of security, so that those whose parents are financially resilient can consider taking more risks with their career, on the grounds that if something goes awry, their parents will help pick them up.”
“They also offer role models into professional jobs – sometimes through contacts, but also by showing their kids a workable path to these roles. Those whose parents remained in education for longer are also able to offer more academic support growing up. It’s one reason why if your parents were professionals, your odds of being in a professional occupation are six times better than someone from working class origins.”
“Parental education is therefore likely to improve your earning potential – so you have more surplus income and more savings. Your father’s education has more of an influence than your mothers , although both matter. This could be because fathers tend to earn more, and as higher earners, this has more of an impact on the family overall.”