It’s no secret that many young people are facing considerable financial challenges compared to their parents and grandparents.
According to the Luxembourg Income Study Database, since 1926 every generation has enjoyed higher living standards than their predecessors; all except millennials (i.e. those born between 1981-2000) whose incomes have barely grown in comparison to “Generation X”.
This glosses over the fact that young people also face higher university costs and house prices than their predecessors.
Graduate debt in 2017 stood at an average of £57,000 per person. Lloyds Banking Group also reports that the average cost of a first home in 2019 is £212,473, whilst ten years ago it was £153,030. Deposits have also climbed considerably, making it harder for people to get onto the housing ladder. In 2008, the average deposit on a first home was 14% of the house price, which represented just over £20,000. By 2019, however, the average deposit for a first-time buyer is now £32,841.
For under-18s, it is uncertain whether they will face similar market conditions to those experienced by millennials. However, given recent historic trends, it seems reasonable to assume that most would benefit greatly from any financial support parents or grandparents are able to bestow. Fortunately, there are tax-efficient options available to facilitate this in 2019-20.