AT A time when financial pressures are increasing and money is high up the news agenda, a growing number of families and couples in Scotland are hiding from financial discussions with one another, finds new M&G Wealth research.
M&G Wealth’s Family Wealth Unlocked report, now in its third year, looks at the financial habits of 2,000 UK adults who personally use or have a family member who uses, a financial adviser. According to the report, long-term finances could be impacted by a contraction in conversations today, with the research finding that individuals are not planning ahead and could be missing out on finding financial solutions.
Cost of living hits family openness around finances
The ‘Family Wealth Unlocked’ report finds that there’s been an increase in the number of people not wanting to discuss finances since the start of the cost-of-living crisis and are hiding worries or money from their loved ones. Key findings from the report include:
- A fifth (20%) of adults who have used a financial adviser are hiding their finances from their family
- Only two thirds (65%) of Scottish respondents in a couple talk openly about their finances with their partner, while one in ten (8%) say they wouldn’t discuss anything financial with them.
- Just 45% of respondents in Scotland said they can talk openly with their parents about money.
- In fact, respondents in Scotland are more likely to seek advice from financial experts and influencers (26%) and financial websites (19%) than from their partner (18%) or parents (18%).
- This comes as a tenth (10%) of people surveyed in Scotland worry about having to support their family financially on a monthly basis, with 4% worrying about this “multiple times per day”.
- Nearly one in four people surveyed (24%) in Scotland are worried that the cost of living will go up and prevent them from saving as much as they would like to.
Kirsty Anderson, savings expert at M&G Wealth, commented: “Discussions about money have always varied between families, but our research suggests that openness between generations is taking a hit in this current cost-of-living crisis. In an environment when everyone is feeling the pressure, it is important that conversations about money start at home. Now is not the time to shy away from discussions or hide financial issues, as speaking about problems and being honest with family members can provide the extra mental and emotional support people might need, as well as helping them to create a financial plan.
“Our data shows an increase in the amount of family gifting between generations, with older family members less likely to wait to pass on money through inheritances. Gifting can work out as a tax-efficient measure to help younger family members deal with life events or daily financial challenges, from buying a house or paying for a wedding, to just to helping them to manage their day-to-day bills. Encouraging conversations at home about financial affairs, or seeking professional financial advice, could help to unlock solutions for those struggling.
“The research shows that financial advisers are in a good position to facilitate these conversations within families, as a growing number of people are now sharing their adviser with other family members. Individuals benefit from the knowledge of the family’s financial affairs, while enabling them to better prepare for the future from a more informed point of view. For example, a financial adviser can not only work out the best way to cascade wealth to the next generation, if that is the objective, but also how to maintain control of that wealth in the most appropriate manner depending on the family circumstances.”
Inheritance Impacts
Family communication is particularly crucial for those expecting to inherit funds from their relatives. For those planning ahead or in need of immediate funds, families are starting to look more at gifting as a tax-effective option to help loved ones. Over two thirds (68%) of respondents in Scotland have received some money from parents for a life event or to support with ongoing costs, while 44% have received money from grandparents.
Some of the most popular items being gifted from parents include money to help with bills (15%), money for a house deposit (13%), money for a wedding (12%) and 11% who say their parents have gifted them money for savings or investment.
With freezes to the inheritance tax (IHT) threshold and the research showing that a greater number of people are planning to leave inheritances due to the cost-of-living crisis, the number of people falling into paying IHT is ticking up, with an additional £1bn being claimed by the Treasury this year.
The cost-of-living crisis has impacted many people’s planned inheritances – for both better and worse. The amount of inheritance that respondents in Scotland are expecting to receive has increased for a quarter of respondents (24%). One in five (19%), however, think they will be receiving less than they had previously expected.
