In a significant shift in family financial dynamics, a new trend is emerging: families are increasingly pooling their resources to tackle life’s financial challenges. Emma Graham, a director for mortgages at Hodge, highlights this change. “Families are entering a new financial era, focusing more on combining their monetary assets,” she explains.
A recent study conducted by Hodge sheds light on how families are collaborating to overcome financial hurdles. The study, which surveyed 1,240 individuals aged 16 to over 80, reveals some eye-opening trends:
- Widespread Reliance on Equity Release: A striking 61% of individuals under 50 have received financial aid from relatives, primarily through equity release from the relative’s property. This approach is helping younger family members buy homes, pay off debts, and manage the escalating cost of living.
- Impact on Property Purchases: Notably, 25% of beneficiaries used this financial support to invest in their own properties, indicating a growing reliance on family wealth for real estate purchases.
- Under-50s Needing Support: An overwhelming 84% of those under 50 acknowledge the need for family financial aid, underscoring the challenges they face in the current economic climate.
The Cost of Living Crisis and Its Effects
The study also highlights the impact of the cost of living crisis on older generations. Over half of the participants over 50 (57%) report that the crisis has affected their capacity to lend money. This indicates a two-fold challenge: while younger generations need more support, their older relatives are also feeling the financial squeeze.
A Shift in Family Financial Strategy
Graham emphasizes a notable shift in family financial strategies. “Instead of focusing on inheritance, families are now looking at using assets accumulated by older generations to support their children or grandchildren in the present,” she states. This approach is a response to the cost of living crisis, aiming to address immediate financial needs rather than future inheritance.