One in five (19 per cent) adults are too embarrassed to discuss their finances with close relatives, according to research by M&G Wealth.
As the cost-of-living crisis bites, 20 per cent of adults said they hide their finances from their family.
M&G Wealth’s Family Wealth Unlocked report, published this week (September 27), looked 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, as individuals are not planning ahead and could be missing out on finding financial solutions.
It found 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.
Only half (49 per cent) of respondents in a couple talk openly about their finances with their partner, a drop from 69 per cent who said they did so in 2022.
Meanwhile, almost a quarter (23 per cent) said they wouldn’t discuss their finances with anyone in their family.
Kirsty Anderson, savings expert at M&G Wealth, said: “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.”
Respondents also said they are more likely to seek advice from financial websites (21 per cent) or online search engines (18 per cent) than from their partner (15 per cent) or parents (13 per cent).
This comes as a fifth (21 per cent) of people surveyed worry about having to support their family financially on a daily basis, with 11 per cent worrying about this “multiple times per day”.
Anderson said: “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 also found that nearly four in 10 people surveyed (37 per cent) have reduced savings and investments contributions because of the cost-of-living crisis, with an additional quarter (27 per cent) also looking to do so before May 2024.
Inheritance impacts
M&G said 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.
Three quarters (75 per cent) of respondents have received some money from parents for a life event or to support ongoing costs, while 56 per cent have received money from grandparents.
The number of people who said they’d received no gifts has decreased from 23 per cent to 16 per cent year on year.
Some of the most popular items being gifted from parents include money for a wedding (14 per cent), money for a house deposit (12 per cent), to help with bills (12 per cent) and 11 per cent who say their parents have gifted them money for their savings and investments.
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.
However, the report found that nearly three in ten (27 per cent) of those individuals which are due to inherit from their parents are yet to plan for it.
The cost-of-living crisis has impacted many people's planned inheritances – for both better and worse.
The amount of inheritance that respondents are expecting to receive has increased for over a third of respondents (34 per cent). One in 10 (13 per cent) however, think they will be receiving less than they had previously expected.
Anderson added: “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.”
sonia.rach@ft.com
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