The late 1980s TV series “Home to Roost” saw Henry Willows (John Thaw) have his life turned upside down after his 18-year-old son Matthew came to live with him. Today practical economics has made adult children living at home a reality in many families. The current generation of young adults face a number of challenges on the journey to (financial) independence.
While politicians wrangle about tuition fees, parents know that the real cost of an education goes way beyond that. Put quite simply, people need to live while they’re studying and that means paying for housing costs if living away from home, and still having money left over to pay for other living expenses.
These days getting that first job may mean starting off on a zero-hours contract, working part-time or temping. It may even mean accepting a period of voluntary work or an unpaid internship to get a foot in the door of a particularly competitive industry. None of these are necessarily ideal situations for independent living in general, nor for satisfying the affordability criteria for mortgages in particular.
There’s a lot that could be said about the property market. One key point is that deposits are massively important and it’s much easier to save for a deposit when living rent-free with parents than when paying rent elsewhere.
Anyone who’s watched period drama’s such as Downton Abbey will know that multi-generational homes are nothing new. Several generations of the Crawley family all live together (more or less) happily. Admittedly Downton Abbey was substantially bigger than many modern family homes and lifestyles and expectations back then were very different. Modern homes can work on a multi-generational basis, but this should ideally be a matter of choice. It should also be clear how financial responsibilities are shared between members.
If adult children are able and willing to pay their share of the household bills then there should be no adverse effect on the family finance. If, on the other hand, parents are effectively subsidising their adult children then their own personal wealth may suffer. Savings may be used up and plans for investing may have to be put on hold. In short the presence of adult children in the house may be a sign that it’s time to get some advice from a professional financial adviser to help them to move on.
The first step to nudging a young adult gently out of the nest is understanding why they’re in it in the first place. In some cases there may be non-financial reasons at play as well as financial ones. For example if parents are doing all the housework as well as providing financing then this may be a strong incentive for adult children to stay in the parental home.
For example if a young adult is struggling to find stable work then it may be helpful for them to get some career advice. This can look at the skills, abilities, and qualifications they have at the moment and see what their options are right now. This might also be an opportunity to see if there are any “easy wins” to help get young adults into work. For example first aid certificates, food hygiene certificates, and SIA licences are all relatively easy to obtain (at least compared to a degree) and can help kick-start a young adult into some form of employment.
Some parents may find it appropriate to gift their children cash to help them on their way, for example to provide a deposit for a starter home. This may be seen as their inheritance in advance and in some circumstances may be helpful from the perspective of reducing a parent’s tax liability. Such gifts however, should be looked at in terms of each individual’s situation to ensure that they are appropriate and will be used sensibly.
We can take a positive approach to life and make positive lifestyle choices. Alternatively, we can be a Mr (or Mrs) Burns. Admittedly, the arch-villain of The Simpsons is an extreme. He is, however, a perfect example of someone who sees money as an end in itself.
It’s hard to imagine him singing “Money can’t buy me love”. Actually, it’s hard to imagine him singing at all. His problem isn’t that he has too much money. Bruce Wayne, Tony Stark and Professor X were all similarly loaded. It’s all about attitude. Some financially-successful movie characters can teach us a lot about how to manage money.
Uncle Scrooge McDuck is an expert at money management. His personal money is kept in gold coins in a vault. That vault is also his favourite place for swimming. Although he started out as a miser, Scrooge soon mellowed. He has stayed thrifty, but learned to be generous. Although he is never without a financial plan (or several), he stays “Uncle” Scrooge.
In other words, he always remembers to take care of his family. He generously gives unbiased advice to his three nephews. In fact, he frequently takes them with him on adventures.
His money opens up opportunities for himself and his young nephews. Although Scrooge is getting on in years, planning for care is not a concern for him. His thrift and investments have made sure that he will always have what he needs.
“No Addams has worked in the last 200 years!” Why should they when the family owns so many companies? Gomez’s business investments are highly varied. He owns a salt mine, a crocodile farm, and a tombstone factory to name but a few. It’s unclear whether is success is due to luck, skill or good advice.
Not worrying about money leaves Gomez with plenty of energy for his loved ones. He can literally afford to let his life revolve around his wife and children. Gomez probably has a longer investing horizon than mere mortals. His principals of quality and varied investments are, however, a good example to ordinary humans. Gomez never puts all his eggs in one basket – not even lizard eggs.
Although Bruce Wayne inherited a fortune, he built on his parents’ legacy. Like Gomez Addams, Bruce Wayne’s business interests are varied. Wayne Enterprises is known to be active in such diverse areas as food, finance and high technology. Indeed many of Batman’s gadgets (including the Batmobile) are manufactured by Wayne Enterprises.
Bruce Wayne has always stayed in tune with his family’s values. At the same time however, he’s keen to keep the business in line with modern trends. Clearly he understands that traditions and modern opportunities can be happily combined. As Batman, Bruce Wayne shows his darker, serious side. As himself, he can be more lighthearted and generous. He is happy to spend his money; enjoying quality nights out and entertaining at his mansion.
After all the work his does in both his guises, arguably he’s earned the right to a rest!
All too often it can feel like the latter, and while teachers take a well-earned break from the classroom, your role as a parent is to find fun and stimulating activities for your children to do.
Countless websites and blogs will suggest (as if you hadn’t already thought of it) to take a day out to a safari park or hit the cinema.
This is a quick guide to a few alternative projects you can do that won’t break the bank and are just that bit different.
Involving children in anything creative tends to be a great antidote to boredom, but being able to taste the finished product is even better.
Baking needn’t be the complex, like it is on the Great British Bake Off; instead there are for cakes, biscuits and bread.
Sewing has become an increasingly popular hobby for children in the last few years.
The recession and the growing ‘make do and mend’ culture in Britain has made thrifty solutions and natural creativity a really enjoyable activity for children.
Even if you don’t have any needle craft skills yourself, finding patterns, material, needle and thread and even a cheap sewing machine is quite easy and can mean hours of concentration and enjoyment for your kids.
One way of involving your children away from the television and outside during the half term holiday is to involve them in a garden or allotment project.
Creating a vegetable patch, raised flower beds, planting fruit trees or bushes, or planting a small herb garden – these are all perfect activities for the early spring in the gardening calendar.
By the summer time you will be able to see the rewards of your efforts and your children will be able to enjoy seeing the garden blossom.
And then there is everything else…
Of course, the above list of holistic activities might not work and your children might well roll their eyes at the sound of baking or sewing. There really is no accounting for taste sometimes.
In which case it is important not to ignore the standard solutions of day trips to local attractions such as the cinema, leisure centre’s or the ice rink.
Your children are, of course, your toughest audience and, though you love them dearly, they are often difficult to please.
Pretty soon we will be bombarded with adverts for holidays, cruises, resorts and hotels within days of the Christmas season ending, as tour operators are anxious to cash in on Britain’s mid-winter blues.
January in Britain is pretty bleak and many people instinctively turn their thoughts towards the summer, sunshine, and long white beaches.
Now is the perfect time to start saving and planning for the summertime, especially if you have a dream holiday you would like to pay for.
Many of us, post Christmas, will be on a ‘money diet’ until Easter time. An enforced period of saving after the Christmas binge can help to bring down eye watering credit card bills, but it’s also the perfect time to put away money for the summer.
Now is also the time to take advantage of the best deals. Booking early invariably guarantees you places on flights and at hotels, but it also ensures that you won’t fall prey to exorbitant charges.
Late bookers for summer holidays may find they wind up paying more for the same services their earlier booking counterparts receive.
Kids Go Free
If you are planning for a family holiday and have children then there are countless deals available with tour operators that offer a ‘kids travel free’ promotion.
Taking children out of school during term time is becoming an increasingly contentious issue for headteachers concerned with targets for attendance, so there may be stringent school rules regulating this issue.
If you are bound by term time holidays only, then a January deal might be the best way of securing that holiday. With many tour operators, the prices of holidays can fall as well as rise as the peak season approaches, if holiday package is under subscribed for some reason, it might be sold off cheaply as July and August approach.
Read The Small Print
On the ‘children go for free deals’ you are effectively getting free air fare, not free accommodation. Your child will be expected to stay in your hotel room and will not get one of their own.
This is often fine for young children who want to be with their parents, but for slightly older ones it’s probably not going to be suitable.
In addition to this other charges might be levied such as insurance and airport taxes so the ‘free’ bit in the offer might not be quite as free as it suggests.
Comparing the deals
Package tour operators know that many customers will not object to paying slightly higher prices for hotels, resorts or flights because of the convenience factor.
With the hassle of organising and planning an entire holiday taken out of the process, ‘convenience’ is an excellent device for introducing hidden costs and charges.
Whilst there is a lot to be said for tour operators who create holiday packages for their customers, it is worth seeing if booking flights and hotels separately is cheaper.
Search for discounts
Hotels and resorts know that few of their clients are able to pay full price all year round, but they have to remain in business whatever the season.
This means that the internet is awash with discount and voucher sites selling cut price holidays off season and early bird deals, often on high end luxury destinations.
It is worth being an online bargain hunter in the New Year and seeing what deals are available, in January it is a buyer’s market as hoteliers and tour operators often need you more than you need them.
If you are planning your finances for 2015 for holidays and other spending goals, you can always get some professional advice from a qualified financial adviser.
For some, there will have been days of mounting dread and sense of foreboding. However, this is actually the moment in the year to be proactive, positive and practical.
Instead of worrying or being stressed, it’s a moment to embrace organisation, planning, saving, and making 2015 a year of financial success.
Work out what you owe.
In order to get into a strong financial position for the coming year you need to be able to assess your liabilities and get a clear picture of your debts.
If you have more than one credit card, store card, or loan, work out the total amount owed on each and start with the debt that has the highest rate of interest (this is your greatest liability).
Devise a budget.
Maybe more of your income now needs to be devoted to debt repayment, so you need to work out what you can afford from your monthly wage.
Look at your incomings, outgoings and identify luxuries that you can do without .
Streamlining your spending is quite an empowering experience and you will be amazed how much money has gradually trickled away while you haven’t been watching.
Don’t borrow any more until you’ve repaid what you owe.
If you remember one thing from this article and discard the rest, let it be this golden rule. Despite what lenders might tell you, you cannot borrow your way out of debt. Lenders exist exclusively to keep you indebted
Keep track of your spending.
Staying on top of your spending habits is the way you will ultimately triumph. Debt can be caused by one off purchases of plasma televisions or sports cars, it can also be caused by constant monthly overspends – £50 here, £100 there.
This kind of spending is emotion based (much of our spending is pretty irrational, and shops and advertisers know it), but it does not mean you have to be a slave to it.
Instead, you need to make sure that you ask yourself a question with every purchase: “Is this a need or a want?”
Then ask: “Do I really, actually need it?”
Consider Switching your providers
One quick way of freeing up spare cash to commit to bringing down household debt is to review your utility providers.
By using price comparison websites you can find whether you are getting the best deals on your gas, electricity, phone, and car insurance.
You might even want to see if shifting your bank account can result in lower charges or higher rates of interest.
It might also be worth investigating whether or not you can move your mortgage, as the loan on your property is the biggest debt you are likely to have.
If you need some advice about how best to manage your money, why not talk to a qualified financial adviser?
If you are going through a divorce, money is probably the last thing you want to talk or think about. Experiencing something as difficult as the end of a marriage cannot be helped by asking questions about your financial future, can it?
Unfortunately, money cannot simply be an afterthought when your are ending a marriage, it has to be one of the central issues that needs to be discussed. In any relationship, finances become intertwined over the years and untangling them is a difficult task.
Inevitably the question of what is ‘fair’ will emerge, but first and foremost, you need to ensure that you can financially survive after a separation.
If you have decided to divorce and you are facing the future on your own, you need to examine your outgoings and make sure that the divorce settlement and your existing income will cover the costs.
An audit of your current or expected bills should include your mortgage, utilities, pension contributions, the cost of running a car and any other liabilities or commitments you might have.
Some luxuries may have to go if you are placed in a more difficult financial position.
The law requires both partners to disclose their finances, so you need to show what cash assets you have in terms of your current account balance, savings, investments, and pensions.
You will also have to reveal what non-cash assets you have. This might include property or collectables that have a high value.
The home that you have shared with your ex partner might now be unaffordable for you to live in, or if your ex partner becomes the custodian of any children from the relationship, they will normally be granted it as the family home in the divorce settlement.
If you agree to sell the house, you will need to come to an agreement on splitting the profits and you will also need to agree on a sale price. Make sure that you have a clear understanding from your ex partner that they are happy with the price and estate agent has suggested as this can often be a contentious issue.
The law states that maintenance payments for children are payable until they are aged eighteen or until they leave school (whichever is later).
If you become liable for maintenance, you will be obliged to pay it until the spouse who is the primary carer re-marries or one of you dies.
Decades ago, the costs of divorce were significantly higher because of legal fees. Fewer marriages ended in divorce and divorce lawyers were not quite as ubiquitous as they are today.
Now the cost of legal advice during a divorce has substantially fallen and most divorce law specialists offer a package deal that means that costs are unlikely to spiral.
This said, it is important to examine the small print in any legal contract and discuss with your prospective lawyer any issues that are likely to make the proceedings more complex or time consuming (joint ownerships of businesses for example).
At the end of the day, you are trying to secure your own financial future and there is little point in going through a painful process if all you achieve is the paying of excessive legal fees.
If you would like some professional advice about planning your future after a divorce, you should talk to a qualified financial adviser.
Cynics might say that the best way to avoid the disappointment of failed New Year’s resolutions is not to make them in the first place, so in this blog we’re going to defy the pessimists and show some simple ways you could have a healthier, happier and more prosperous 2015.
Much of the country is gearing up the festivities which seem to start in about late November and carry on ’til the first week of January. If you’re lucky, you’ll be able to deal with festive excess without too much to worry about.
There are some simple measures that we can all take to make lifestyle changes stick in the new year and this can also help with making positive changes in spending, saving and investing.
Make it manageable
January resolutions invariably fail because they are unrealistic.
If you need to lose weight, stop smoking, and curb your sugar and alcohol intake, the best thing to do is to tackle each problem one at a time.
If you decided to start with losing weight, you are much more likely to succeed by setting yourself small but achievable goals.
Your biggest obstacle isn’t the dieting or exercise, it is maintaining a positive mental attitude, and it’s a lot easier to do this once you start to have small successes. Each milestone you hit will build your confidence and make you see that achieving your goal is possible.
There is no point starting off with a daunting task that seems impossible, the mind invariably convinces us to give up if a task seems to be beyond our power to complete.
Ignore the voices
Humans have evolved to avoid hardship and to gravitate towards comfort.
An afternoon in front of the TV with food and drink may be more gratifying to our nervous systems than training for a marathon; however marathon runners experience far more endorphin highs than couch potatoes in the long run.
This is why, after your first run round the park or your first trip to the gym, the voice within will probably say something like: “Well done, you deserve a treat” or “You can stop now”.
This voice seeks to avoid effort and steer you towards instant gratification, but it will be your undoing. It’s the same voice that tells you to spend on a credit card when you know you can’t afford it.
In the New Year there are two kinds of plan you could make; a physical fitness plan and a financial one.
In the first case, block a manageable amount of time each week, get some advice on diet, identify your fitness goals, and then stick to it.
In the second case, the procedure is remarkably similar. If you’ve decided that 2015 is the year that your finances need to get back on track, start by identifying your goals (preferably on New Year’s Day).
As with fitness, your goals need to be SMART – Specific, Measurable, Attainable, Realistic and Time Related. If you’ve decided that your biggest priority is to pay off the credit card and eliminate personal debt, you need to work specifically out exactly how much you owe.
Find a way of measuring how much you are repaying. This is relatively simple; look at your online bank statements regularly, or look at the monthly credit card bill. Keep a close eye on these figures because we cannot manage what we do not measure.
Your monthly debt reduction goals need to be attainable and realistic. If you can only afford to repay £30 a month, don’t attempt to pay off £100 because you will simply fail to do so and collapse into apathy.
Your savings plan should include short term, medium term and long term goals. Plan what you want to save, spend, and invest in 2015. This might include a new car or a summer holiday. Look at what you need to save for in the next 3-5 years – the medium term, which might include university costs or a home extension. Then you need to think about long term savings such as retirement, or paying off the mortgage.
Pay debt before you save
Your financial planning should always focus on eliminating debt first because it will invariably have a higher rate of interest than savings do.
If you are looking for new ways to manage your wealth effectively in 2015, why not get some advice from a financial adviser?