family finances under strain a reflection on 2008

16th January 2009

highlights from 2008 3GB research:

In January this year, research conducted by engage Mutual looking at how families were coping with the onset of the credit crunch, showed almost one in two parents with young children struggling to make ends meet – and just over one in two saying they would cut back on the amount they spend on their children in the year ahead¹.

money top subject for parent-to-child chats:

As the financial downturn worsened, the research revealed parents talking to their children about money facts above other chats about STDs, racism or religion. Debt was the most common financial topic of parental education (64%), followed by saving for the future (62%). The only ‘facts of life' to be considered more important than debts were drugs and alcohol (78%), personal hygiene (74%), talking to strangers (73%) and the ‘birds and the bees' (71%).²

retirees suffering from rising costs:

It's not just parents that are finding it hard to cope with the rising costs of living, more than one in two retirees (54%) are also struggling to make ends meet as prices escalate. Around one in two (49%) of retirees short on cash have been forced to make cutbacks to afford expenses, with 17% simply going without.³

Squeezed from both sides, the research also showed more than half of grandparents (57%) helping to support two generations of their family – contributing towards childcare costs (28%), debt repayments (35%) and home costs (33%).⁴

inheritance 'a must' for some:

The research showed almost one in two Britons putting their life on hold, saying they are unable to afford to pay for big costs like mortgages and further education without the aid of an inheritance.

One in ten Britons (11%) say they could not own a property unless they inherit money and almost one in four (23%) say they would be able to pay off their mortgage only with the help of an inheritance.⁵

grown up children: the 'givers' and 'takers':

More than a quarter of parents with children over 25 are helping their grown up children financially, with 31% of those parents still handing out 'pocket money'⁶. On the other side of the coin, more than 41% of 18 to 24 year olds are contributing towards utility bills, which have seen major hikes over the past 12 months, with 7% supplementing parents' incomes and pensions.⁷

healthcare sidelined:

More than 60% of people in Britain said they can no longer afford to pay for some of their family's healthcare needs as the cost of living spirals. Of those struggling to fund family healthcare, more than a third (43%) can no longer afford regular check ups at the dentist, or treatment for dental problems.⁸

Karl Elliott, 3GB spokesperson for engage Mutual Assurance said:

"Now in its third year, the research reveals a fascinating variety of family and generational relationships, and the extent to which money binds these family ties."

"If anything, the findings of the past twelve months serve to underline the need, wherever possible, to set aside even modest amounts to help shore up the family finances. Times are tough, and the forecast is for it to remain so for some time. Those who can adopt the basic principles of savings and protection will be better prepared to meet the challenges that lie ahead."

engage Mutual provides a range of affordable, straightforward financial products, including: tax exempt savings schemes from £15 a month, health cash plans from £1.50 per week⁹; over 50s life cover from £8 per month, and Child Trust Funds from £l5 per month. See engagemutual.com for details.

engage Mutual Assurance can be contacted on 0800 169 4321 or by visiting www.engagemutual.com

The information contained in this press release is intended solely for journalists and should not be relied upon by private investors or any other persons to make financial decisions.

Kathryn McLaughlin
engage Mutual Assurance
01423 855245
kathryn.mclaughlin@engagemutual.com

footnotes

1. press release, engage Mutual, ‘Spending on Children to Drop in 2008 as Parents Struggle to Make Ends Meet', research conducted with YouGov between 18 and 21 January 2008 amongst a GB representative sample of over 2,000 people.
2. press release, engage Mutual, ‘Let's Talk about Debts Baby', research conducted by YouGov between 18 and 21 January 2008 amongst a GB representative sample of over 2,000 people.
3. press release, engage Mutual, ‘Living Costs Push Retirees to the Edge', research conducted by YouGov between 11 and 14 April 2008 amongst a GB representative sample of over 2,000 people.
4. press release, engage Mutual, ‘Grandparents become 3GB Cash Machines', research conducted by YouGov between 25 and 28 July 2008 amongst a BG representative sample of over 2,000 people.
5. press release, engage Mutual, ‘One in two Britons put life on hold for inheritance which may never come', research conducted by YouGov between 29 April and 1 May 2008 amongst a GB representative sample of over 2,000 people.
6. press release, engage Mutual, ‘Financially Stretched over 25s get Pocket Money from Parents', research conducted by YouGov between 29 August and 1 September 2008 amongst a GB representative sample of over 2,000 people.
7. press release, engage Mutual, ‘Kids bail out Bank of Mum and Dad', research conducted by YouGov between 29 August and 1 September 2008 amongst a GB representative sample of over 2,000 people.
8. press release, engage Mutual, Six in Ten Can't Fund Healthcare Costs, research conducted by YouGov between 25 and 28 July 2008 among a GB representative sample of over 2,000 people.
9. £1.50 per week when payments are made via workplace payroll deduction

notes to Editors:

1. engage Mutual Assurance is a trading name of Homeowners Friendly Society Ltd (HFSL), Registered and incorporated under the Friendly Societies Act 1992, Registered number 964F and its wholly-owned subsidiaries, engage Mutual Funds Limited (eMFL) and engage Mutual Insurance Ltd (eMIL). Both HFSL and eMFL are authorised and regulated by the Financial Services Authority (FSA). HFSL's Register number is 110072, eMFL's Register number is 181487. eMIL is authorised to conduct general insurance business by the Gibraltar Financial Services Commission and is regulated by the Financial Services Authority for the conduct of UK business. eMIL's FSA Register No is 485680. You can check this on the FSA's Register by visiting the FSA website www.fsa.gov.uk/register or by contacting the FSA on 0845 606 1234.
2. engage is one of the larger UK mutuals providing simple, value for money savings, protection and investment products. It currently helps over 420,000 customers of all ages to protect, preserve or enhance their welfare, with some of the most straightforward products on the market. engage prides itself on being a family-oriented, modern mutual, providing products that help enable households of all kinds to plan their finances to help meet their future needs. More information on engage Mutual is available at www.engagemutual.com
3. engage supports mutuality, friendly societies and the regional financial services industry through links with the Association of Mutual Insurers, the Association of Friendly Societies, Mutuo and Leeds Financial Services Initiative.
4. engage Mutual Funds Limited (EMFL) is a provider of the Child Trust Fund direct and in partnership with organisations including Yorkshire Building Society and Scarborough Building Society.
5. engage Mutual has been the title sponsor of the Rugby Super League since 2005 and has extended its agreement to 2010.
6. engage Mutual announced its entry into the health cash plan market in July 2008 following an agreement of partnership with Wakefield & District Hospital's Contributory Scheme (WDHCS). Further to this, 30,000 health cash plan customers transferred from Premier Health Benefits (part of WDHCS) to engage Mutual Insurance Ltd.