Among the many effects of 2020's pandemic has been the phenomenon of the 'boomerang children' — grown children forced to return to family homes as times get tough. Jason Smith of Money Expert explains how parents and children can handle the financial issues that this can throw up.
It’s the pandemic of boomerang children. As times have gotten tougher many have been forced to move back home, or shelved plans to fly the nest in the first place.
Official figures last year showed that just over one in three 18-34-year-olds were still living at home; now, that number has exploded, and includes many more over 40s. That’s according to a survey of 1,000 parents conducted for price comparison firm Money Expert, a firm that has helped over 1 million customers save on their utilities, broadband and insurance bills since its foundation in 2003.
Here, Money Expert’s CEO Jason Smith offers his advice for those moving back in with their parents, and provides tips for parents on ways to handle changes within the household and big expenses such as Christmas.
Your research highlights the phenomenon of Boomerang Children caused by the Pandemic. Tell us more.
14.9 million people, 29% of the adult population, suffered a hit to their finances in March when the first lockdown started. Some lost all their income after being made redundant, but millions more saw their income fall after being furloughed, having their hours cut or losing clients and business. This has resulted in them falling behind on utility bills, council tax and many needing to return to their family home — making them into boomerang children.
These are people of all ages now having no option but to move back in with their parents as they can no longer afford to live independently. Thankfully, the banking sector is taking measures to help alleviate this situation. The Financial Conduct Authority have confirmed that lenders will now extend mortgage payment holidays until 31 July 2021 for homeowners who have been financially impacted by the coronavirus crisis. This provides some relief and extra time for those impacted to recover financially.
This year has been hard with many job losses and furlough, what would be the first piece of advice you would give to someone who has found themselves in this situation?
We’re living in unprecedented times. Household finances have been hit hard and the numbers are staggering. The number of people in severe debt has already nearly doubled since March and many of these individuals have turned to short-term loans like credit cards and overdrafts.
When it comes to paying off debt, your credit card is often a priority. High interest rates mean charges can grow quite quickly if you find yourself unable to pay the debt off. Over time this could impact your credit score and financial eligibility further down the line.
As well as keeping repayments under control where possible, making changes to your lifestyle and daily costs could help free up extra money. Consolidate home bills and forgo services you don’t strictly need, set budgets for grocery shopping and other costs or renegotiate your phone contract — you will see the difference.
How can your children moving back home affect your household finances and why?
More people in your home means more showers, more dishwasher loads, more cooking and more dirty laundry to wash, all of which adds up at the end of the month. Increased usage is going to produce higher bills — but there are a few opportunities to save a penny.
Key areas to investigate are energy and broadband. Britons devote two-thirds of their domestic energy consumption, and half of their energy bills, to heating their living spaces. So, switching energy suppliers should be your first step, if you’re looking to cut down your monthly spend.
Additionally, with an extra body or two in the house, especially if they are working from home, it is important to make sure your broadband is up to scratch. You can get cost effective plans with no download cap, meaning no worry about going over allowances.
What would you say to parents who are now managing a much busier, more hectic household, both personally and financially?
Communication is key. If your child is moving back home create ‘house rules’. These do not have to be as regimented as when they were younger, but simply making your expectations clear. Your children need to be understand how they can contribute to the household costs — and be aware that two pairs of dirty socks don’t constitute a full washing machine load.
This will differ for every family, but I think as long as you are all open and upfront, it will help to alleviate some of the stress and make the extra costs manageable.
When it comes to managing household finances, how can Money Expert help people to make the most of their income?
Money Expert is a full service, independent price comparison site which has been operating since 2003 and we are fully dedicated to helping UK households reduce their living costs. This means helping people make the most of their income by getting better deals on essential services, like gas and electricity.
Our main priority is helping you save money, but we also give you the chance to switch to a service that better fits yours and your family’s needs in other ways. This might mean getting a more powerful broadband connection or switching to a renewable energy supplier.
Why should families with returning children switch providers?
With family members returning and us all spending more time at home, our needs may have changed, from broadband to water usage. Switching providers can be a good way to save money which, given the hard times we find ourselves in, is a quick and easy way for homeowners to save.
With it almost being Christmas, what can families do to save money ahead of the festive season?
One of the biggest expenses, most disputed in the home, is usually heating. Some family members will tell you to layer up, whereas others will whack up the thermostat.
You also have to account for there being more people using hot water, showering, more dishwasher loads and those all-important cups of tea. To help with bills, make sure your usage matches your actual needs — only heat the parts of the house you are spending time in, unplug appliances when not in use and only turn on the Christmas tree lights in the evening. Being actively mindful of your usage is the best way to manage it.
What would you say to those who have moved home and now find that their finances have recovered — so much so that they are able to look at buying a new home or car?
I would suggest waiting for things to settle. Household borrowing and arrears related to the pandemic have rocketed by 66% since May, to a staggering £10.3 billion, and there is no clear-cut way of knowing how long we will feel this ripple effect for.
Yes, there are some great opportunities at the moment with the shift in buyers’ habits moving from urban to rural properties and the ban on new petrol and diesel cars in the UK from 2030 under the PM’s green plan. However, I would suggest for those now looking for a good home or car deal, to do your due diligence. Look into a price comparison site for things like insurance, as we can get exclusive access to special deals you can’t get elsewhere.
Why should people use comparison sites such as Money Expert?
We work in partnership with many providers to find you money-saving deals with some of the nation’s favourite providers. All partners we work with are carefully vetted for quality of service, financial stability, and customer service. We always make sure our customers are only introduced to reputable suppliers. Our guides contain all the information you need to continue to make savings even after you’ve switched to a new, cheaper product.
This year has been one of the most unpredictable yet. Many people are being forced to put their lives on hold and rely on their parents, creating new challenges for both sides. However, Money Expert is on-hand to assist with ways to reduce your bills and ensure you are getting a good deal across essential household services. Our services are comprehensive, impartial, and completely free and, we can help people save up to hundreds of pounds by just changing providers.
Since 2003, Money Expert has helped over 1 million customers save on their utilities, broadband and insurance bills — find out more at moneyexpert.com.