Playing family fortunes

In her latest column for Financial Adviser, Iona looks at why families are happy to let their wealth cascade down the generations

One of the most significant outcomes in the lottery of life has to be the family we are born into. A savvy and attentive parent – all the better if there are two – can give an instant, highly potent advantage in this world. Throw in a couple of wise, wealthy grandparents and you have well and truly lucked out.

Dream parents and grandparents do not just offer up role models for solid money management – they also support us until we can support ourselves. In other words, they make good with the dosh when we really need it, even as we progress into adulthood.

I do not know how many of my 20-something friends could have stayed afloat, let alone started to fulfil their potential and lay the foundations for a bright future, if their families had not thrown them a financial lifeline or two. We are all aware of the conundrum facing first-time buyers, many of whom cannot save for a mighty deposit because they are tethered to grossly high rent. We know the job market has not been kind to graduates and school leavers since the recession took hold. It hardly needs stating that starter wages are not commensurate with the cost of living once taxes, bills and tuition fee debt is accounted for.

Little wonder that many members of the older generation do what they can to ensure these hurdles do not floor the talented young people that they know and love. An acquaintance of mine paid a modest amount of rent to stay at home for four years, only to be presented with all the cash she ever paid (plus a bit extra from her parents) on her 26th birthday. Imagine her surprise and delight when she was told she could get her first home deposit with all the money she had saved. Another young guy is pulling out all the stops to find a job that pays him more than the dole and is renting a grotty flat in my hometown of Edinburgh – he would be forced to live on £9 a week after bills and housing costs were it not for financial support from his grandparents.

We are not talking about mollycoddling or handouts for spoilt brats here; the majority of young consumers want to be self-sufficient more than anything else. We feel an uneasy combination of gratitude and guilt when family members promise to help us through university, give us their old car or loan money on terms and conditions that could fit onto a postage stamp.

But, to be fair, we did not choose to be born and certainly not into this economic era in which young people have really drawn the short straw. Is it too much to expect some financial assistance as we find our way through this mess? Besides, the former universities minister, David Willetts, is right to point out in his book, The Pinch, how a supportive approach is in the babyboomers’ own interests. He even mentions a popular US bumper sticker that says: “Be nice to your kids – they will choose your nursing home.”

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