Young people learning lessons from ‘bank of mum and dad’

Scottish students face leaner times as parents tighten belts

By Eric Nisbet

Published:

Seeing how closely our fortunes are linked to the performance of banks and businesses is a frightening experience.

Normally used to a helping hand and generous terms at the “bank of mum and dad”, teenagers, students and young adults are finding that, all of a sudden, their local branch is closed for business.

In the past 18 months the bank of mum and dad has come under huge pressure.

Food prices have gone up, heating costs have soared, petrol bills have leapt and the employment outlook has turned very grey.

Where families throughout Scotland used to meander along on a current of easy credit, they are now paddling like fury just to stay afloat.

As the economic tide continues to turn against them, there is little prospect of an easier ride in the comings months.

For young people who had previously relied upon their parents for financial help, the current environment has left many facing difficult decisions and mounting problems as they are forced to meet their own overheads.

For teenagers, the immediate hit has come from shrivelling allowances and disappearing handouts.

Insurance giant Axa found that 2.2million parents had cut allowances altogether or at least put checks on the amount of money they gave to their children.

For certain groups of parents, the deteriorating financial situation has been tougher to deal with than for others. The worst affected are those between 55 and 64, where 66% have admitted to changing the way they give money to their children in the past six months.

Students are perhaps the most financially vulnerable group of young adults in society and, for many, the problems coming home to roost at the bank of mum and dad are going to create real problems in the academic terms ahead. Halifax has found that 53% of students in the UK receive funding from their parents.

When looking independently at Scotland, this figure goes up to 60%. Given that only 38% of Northern Irish students get financial help from their parents, it is easy to see how much extra pressure their Scottish counterparts are under.

It is also worrying that students in their final year are most reliant on the help from their parents.

Compared with 50% of students in their first year and 48% in their second year, 61% of students in their last year receive parental funding.

Independent Insolvency Practitioners for Scotland is already giving impartial practical debt advice to a growing number of younger clients who have struggled with their finances.

If there is one good thing to come out of this, it is that more parents are encouraging their children to save and trying to get them to build up their own nest eggs for the future. It will take time for this to have any real physical effect and for attitudes to really change, but hopefully it will help foster a wariness of easy credit that had hitherto all but disappeared.

Eric Nisbet is director of Independent Insolvency Practitioners for Scotland, a company operated co-operatively by 25 independent insolvency firms in Scotland. For more information, visit www.debtinscotland.co.uk