North-South divide as financial responsibilty peaks at age of 39

Nationally, the key age is 44, when the average Briton will typically be juggling nine major financial responsibilities, ranging from meeting mortgage payments and covering the costs of raising a family.

People reach “peak financial responsibility” earlier in the North than in the South for a variety of reasons. In the South and London people tend to marry and have children later in life than elsewhere. North of the Watford Gap, property tends to be cheaper, so people can get onto the housing ladder at a younger age.

At the other end of the scale, people often see a significant fall in their income when they retire, but by this point they are typically free of many of their financial responsibilities, such as mortgage payments and childcare costs. In fact, the findings show that the key responsibility for these people is paying the household bills.

Myles Rix, managing director of protection at LV=, said: “It is clear that by our 40s, many will be relying on their income to achieve a multitude of things, including raising a family and all that this entails.

“However, whether someone has children or a mortgage or not, we would always encourage someone to put in place a financial back-up plan, such as income protection, that ensures that they would be able to meet their financial commitments if they were to suddenly to lose their income due to accident or sickness.”

Rather than relying on their own income, increasing numbers of people are turning instead to their parents for cash, according to The 2015 Lloyds Bank Family Savings Report.

It appears the Bank of Mum and Dad – long the source of many first-time buyers’ deposits – is now being tapped for everyday expenses too. Over £30bn has been handed over to grown-up offspring in the past year by their parents, an increase of £1bn on the previous year and over £5bn since 2013 – a 21 per cent increase in just two years.

What’s more, grandparents are topping this up by around £6bn, bringing the nation’s annual family “support package” up to almost £37bn.

While some of this money was spent on expected items, such as weddings and deposits, the increase in “withdrawal requests” was driven primarily by increased parental help with rent payments and cars. Other items on the rise in the past year are help with buying appliances and even with day-to-day shopping.

However, while higher rents and the increased cost of living may well account for many of these handouts, a third report suggested another possible cause: financial incompetence.

In its 10-year Financial Capability Strategy, published on Thursday together with the UK Financial Capability Board, the Money Advice Service spells out in stark terms just how much needs to be done to resolve Britons’ financial woes.

Its research found that four out of 10 adults are not in control of their finances, and 19 million people don’t have an approach to budgeting that they feel works. Only half of families have any life insurance, and around eight million have problems with debt.

The Money Advice Service said it revealed a “spend today rather than save for tomorrow” culture.

Andy Briscoe, chairman of the Financial Capability Board, said: “Four out of ten adults are not in control of their finances, so for a great many people money is a constant source of worry and stress. This is a problem first and foremost for the individuals concerned and for their families, but it also has wider implications for society and the economy.

“The stubbornly low levels of financial capability in the UK can no longer be tolerated. Today we are calling for a fully collaborative approach to ensure we achieve the goals set out in the Strategy over the next decade.”

Money: a life of responsibilities

People’s various financial responsibilities peak at different times throughout their lives:

Age 25: Saving for home deposit

Age 30 – Saving or paying for wedding

Age 32 – General childcare costs

Age 39 – Schooling costs (uniforms, trips, etc)

Age 41 – Meeting rent or mortgage payments

Age 47 – Saving or paying for children’s university fees

Age 52 – Saving for retirement

Age 61 – Paying for annual family holiday

Age 62 – Running / maintaining a car

Early retirement – Running the household

Late retirement – Paying bills