Lump Sum Savings From the 'Bank of Mum and Dad'

Does receiving a lump sum of savings from parents really give people a financial head start in life?

There’s no denying our parents are one of our earliest influencers in shaping our life choices and behaviours — such as following in their footsteps when it comes to choosing where you go to university or the career path you pursue. And sometimes (as we often see with celebrities’ nepotism babies), our parents can give us a bit of a helping hand in life.

But where do we draw the line on nepotism? Just careers and education? Or does nepotism exist in our financial habits too?

Interestingly, our new research shows that the majority of people (70%) in the UK don’t think less of someone's financial achievements, like buying a house, if their parents gave them savings to help them do so. However, the majority (58%) of people we spoke to do believe that those who received savings from their parents have an ‘upper hand’ in life over those who didn’t.

Our previous research also found that a fifth (20%) of UK parents try to save for their children because they fear life will be harder for them. But how does receiving a lump sum of money (or not) affect people’s savings and financial decisions in adulthood?

Jump to:

• How many people in the UK receive a ‘lump sum’ of money from their parents?
• Does getting a savings head start actually make an impact on our financial habits in adulthood?
• How does receiving a lump sum of savings from parents affect people’s relationships with money?
• How does the ‘Bank of Mum and Dad’ affect our savings and debts?
• Does receiving a lump sum of money from parents give people financial independence?

How many people in the UK receive a ‘lump sum’ of money from their parents?

Our new research shows that nearly 1 in 5 (19%) adults in the UK receive a ‘lump sum’ of money from their parents when they reach adulthood, with the average amount coming in at £15,314.48. That’s the equivalent of over 9 million people*.

Our research also indicates that of the people who did receive financial help, the majority (72%) received specific instructions from their parents on what to spend it on. But how does this work out in reality and what do people do with a lump sum of money?

If you’ve received money from your parents but you’re not sure what to do with it, take a look at our blog on what to do with a lump sum of savings for some ideas.

Does getting a savings head start actually make an impact on our financial habits in adulthood?

Through our research, we wanted to understand the impact that receiving a lump sum of savings from parents can have on people’s day-to-day financial habits; looking at everything from spending, to savings and bank balances.

When looking at our findings from a topline view, it’s clear that people in the UK who didn’t receive any lump sums of savings from their parents have slightly better (and perhaps more sensible) daily financial habits.
We found that those who did receive a lump sum of savings are 2.5x more likely to think it’s more important to prioritise saving money over paying off debt (37% vs 15% for those who didn’t), despite experts widely recommending that people work on paying off their high-interest debt first, before focusing on growing their savings.

We also found that those who did receive money from their parents are more likely to say they avoid looking at their bank balance (27% vs 20%), as well as being 1.5x more likely to often use Buy Now, Pay Later schemes (27% vs 18%).

Check out the differences in financial habits between the two groups below:

How does receiving a lump sum of savings from parents affect people’s relationships with money?

People’s relationships with money can sometimes feel like they’re only ‘good’ or ‘bad’, rather than the spectrum that they actually are. It’s largely understood that these begin at an early age, with many of us adopting our parents' financial habits into our own.

Our research found that those who didn’t receive a lump sum of savings from their parents are slightly more likely to have negative feelings towards money, with two-fifths (40%) worrying that they will never achieve financial stability (vs 37% for those who did).

And, despite our research showing those who didn’t receive any financial aid as having more sensible everyday financial habits, they’re still more likely to say they worry about money daily (43% vs 39%).
What’s more, we also found a stark difference in how regularly the two groups of people discuss money with their parents. Those whose parents gifted them a lump sum of savings are nearly 2x more likely to talk to their parents about money than those who didn’t (63% vs 33%).

They’re also 1.4x more likely to say their parents’ financial habits helped them with their own (72% vs 51%), and 1.2x more likely to say their parents taught them the value of money when growing up (86% vs 70%).

How does the ‘Bank of Mum and Dad’ affect our savings and debts?

There’s no denying that receiving a lump sum of savings from the ‘bank of mum and dad’ (or by extension the bank of generous guardians, grandparents, aunties or uncles) can give us a welcome boost to starting our own savings account.

In fact, our research shows that those who didn’t receive a lump sum of money from their parents when they reached adulthood are 2.4x more likely to say they don’t have any savings at all, with almost a quarter (24%) saying this, compared to just 10% of those who received savings from their parents.

However, our data also shows that people who didn’t receive any financial assistance are 1.6x more likely to say they have a pension (36% vs 22%), suggesting they could be more forward-thinking in setting up future nest eggs for themselves.

Check out the differences in savings and debts between the two groups below:

Does receiving a lump sum of savings from parents give people financial independence?

Our research shows that the average age of financial independence in the UK is 21 years old.
However, our research found that those who received savings from their parents actually take longer to reach financial independence than those who didn’t — around a year and a half later — at an average age of 22 years and 3 months old, compared to 20 years and 9 months old.

The ages for financial independence from parents also vary across the UK. In Northern Ireland, financial independence from parents or guardians is reached at roughly 19 years and 10 months old – the youngest age in the UK. Comparatively, those in the South East take the longest to become financially independent, at an average age of 21 years and 8 months old.

Our research found that people who did receive money from their parents are also slightly more likely to say they still live at home with them (14% vs 10%), further suggesting that receiving a lump sum of savings from parents would align with people remaining financially dependent on them for longer.

Check out the ages people become financially independent across the UK below:

Whether you received financial support from your parents or not, building a nest egg of savings or investments to protect yourself financially is now more important than ever.

However, we also know how vital it is to have instant access to your money, especially as the cost of living continues to rise.

Our Instant Access Savings Account allows you to save as much or as little as you want, with a minimum deposit of £1, no fees, no upper limit of how much you can put in, and interest paid out to you monthly.

Our savings account interest rates automatically track the Bank of England base rate, minus a margin (currently 0.45%). This means that with Wealthify, you don't have to wait for the base rate change to be applied, so you’re always getting the best for you and your money. 

Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.

With investing, your capital is at risk, so the value of your investments can go down as well as up, which means you could get back less than you initially invested.

Wealthify does not provide advice. If you’re not sure whether investing is right for you, please speak to a financial adviser.

Methodology

Research conducted via 3Gem survey of 2,000 adults (18+) from across the UK between 29th March and 2nd April 2024.
*(9068985.57) Based on 2022 ONS figures that there are 47,731,503 18+ year olds in the UK