Are you running the Hotel of Mum and Dad? Here’s what you need to know

In the last two decades, the number of adults between the ages of 20 and 34 who live with their parents has gone up by more than one-third.

Research published by the Institute for Fiscal Studies (IFS) in January 2025 reveals that among those living with their parents, men are more likely to do so than women. 23% of men in this age group resided with their parents in 2023/24, versus 15% of women.

If you’re acting as the Hotel of Mum and Dad at the moment, you could be wondering why more and more young people are living with their parents. You may also be pondering what you “should” be doing to help your adult children build wealth for an independent future.

Read on to find out all you need to know.

Several cost of living factors are making it harder for young people to live independently

The younger generations have gained a somewhat “lazy” reputation. But in reality, there are several important reasons for this uptick in those relying on the Hotel of Mum and Dad.

Here are three to consider.

The rising cost of living

As you’ll likely know, since the pandemic, the cost of living has spiked and is unlikely to decrease any time soon.

With inflation rising to double digits in 2022, and continuing to increase (albeit more slowly) since then, the now-higher price of everyday goods and services could be a harsh reality for young people to face.

Stagnating wages

As you can see in the below graph, wage growth has remained relatively flat since 2016, whereas the cost of living has gone up considerably.

Source: House of Commons Library

For young people just starting their careers and perhaps with little capital backing of their own, it may be hard to fund independent living circumstances while also saving for the future.

Ever-increasing house prices

You’ll no doubt be aware that house prices have soared in the last three decades.

According to the Land Registry, the average price of a UK property was £55,925 in November 1994. In November 2024, it was £289,707 – more than five times as much.

4 simple tips for helping your child build wealth while they’re living at home

Understandably, in light of the above factors, your adult child is likely living at home in order to save up for their own place more easily.

Even if you’ve promised to provide additional support, such as a portion of their first home deposit, having their own money to fall back on is essential if your child wishes to become a homeowner or rent comfortably.

Here are four tips for helping them build wealth while they’re living at home.

1. Make personal savings a core aspect of your terms and conditions

If you’re concerned that your child will fritter away what they earn while they’re living “for free”, it may be wise to make personal savings a core aspect of your living agreement.

For example, if your child has finished university and wants to move home and work full-time to save up for their own place, you could stipulate that 20% to 30% of their monthly pay is saved into an “untouchable” fund.

This means they’ll be diligently building wealth while benefiting from low-cost living and won’t be dipping into these savings for holidays and other luxuries.

Doing so could empower your child to be proactive about their future. If they want to know more about allocating their funds according to their goals, speaking to a financial planner is likely to prove constructive.

2. Ask them to pay rent, and save these funds on their behalf

If your child is not the most savvy saver or investor, you could make rental payments part of their living agreement.
This money could then be saved or invested on behalf of your child, ready to be deposited against their first home or to supplement the cost of renting a property once they’re ready.

If they have decided to live at home for a set time frame, you could explore saving options such as bonds, which may offer a higher interest rate than easy access savings.

Remember, though, that giving capital to your child – even if it came from them initially – could count as a gift for Inheritance Tax (IHT) purposes. Speaking with a professional can help you explore all the available options and work out the most gainful and tax-efficient option for your family.

3. Speak to your child about their goals on a regular basis

Stepping away from the financial practicalities, it’s also essential that you check in with your child’s goals and ambitions on a regular basis.

While you likely want them to feel welcome for as long as they need to stay, it could also be prudent to make sure your child is doing everything they can to reach their own goals. These goals might involve moving in with their partner one day, buying a property as a single person, or even living abroad for work (which comes with a substantial initial cost in many cases).

Opening the conversation could give your whole family the opportunity to discuss important issues facing today’s young people, enabling you to work as a team.

4. Encourage them to speak to a financial planner

Even if your child has only just begun their career, it could be worth introducing them to your Kellands financial planner.

Today’s online world is full of conflicting “advice” that might fly in the face of your child’s objectives, even if it sounds like the right thing in at the time. Having a qualified point of contact might be just what your child needs.

Plus, if you’re planning to transfer wealth to the next generation as part of their journey towards living independently, you might wish to speak to us about tax efficiency and the affordability of your plans.

Read more: Do your adult children need financial advice?

Get in touch to find out more about family financial planning

If you’re currently running the Hotel of Mum and Dad, speak to us to find out how we can support your family. Email us at hale@kelland.co.uk, or call 0161 929 8838. 

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning or tax planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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