Success in life comes from hard work and perseverance, but the landscape for those growing up today – even for those under the age of 45 – is very different from that experienced by the generation before.
One difficulty you’ll understand if you have millennial children (or Gen Z grandchildren) is that of getting on the property ladder. While it used to be a ladder that was climbed through saving and hard work, for many, this appears simply unachievable. The ladder is now an escalator, and some parental handholding is required in order to ride.
This has led some to question whether we’re now living in an “inheritocracy”. But is this really the case?
Keep reading to find out.
The UK economy means it’s tough for younger generations to get on the housing ladder
According to Mojo Mortgages, house prices have risen by 2,385% in the last 50 years, from around £10,950 in 1975 to £272,800 in 2025. However, salaries have grown by just 1,400% in the same period.
Statista suggests that the median UK salary in 2025 is £39,000 or £78,000 for a two-person household. These figures would be much higher if wage rises had kept pace with inflation. In fact, a two-person household would earn more than £116,000 on average if this were the case. Conversely, if house prices had risen in line with wage growth, the average house today would cost just £164,670. In 1975, an average deposit was around 13% of two people’s annual salary. Today, this figure is 78%.
Unemployment is also rising among younger generations. Already disadvantaged by poor wage growth and the disproportionate effects of the pandemic, younger workers also make up a higher percentage of the gig economy.
Financial education is also lacking. And this is where the Bank of Family can provide much-needed support, and where professional financial advice can prove invaluable.
The great wealth transfer means that having financially literate beneficiaries is more important than ever
We wrote about the great wealth transfer for the first time back in 2021.
Our article, ‘What the “greatest wealth transfer in UK history” means for you’, explained that trillions of pounds will pass between generations in the next 30 years. This makes it vital that you have tax-efficient estate plans in place, and that younger generations have the financial education to manage inherited sums in the best way for them.
From understanding the value of money to the basics of budgeting, there are some simple lessons you need to pass on now. Understanding these early gives children a good financial grounding from which to save, invest, and protect their wealth as they begin a career and look to get onto the property ladder.
Then you can start to discuss more complicated issues like debt, loans, and mortgages. Frank and open discussions about these topics will make inheritance and your legacy much easier to talk about when the time comes.
This legacy might be in the form of money left in a will, or wealth distributed during your lifetime, when your beneficiaries arguably need it most.
We’re in a meritocracy, but you can still give your loved ones a leg up (if you can afford it)
While some reports suggest that we’re living in an inheritocracy – where one’s ability to deal with life’s challenges depends on the size of the wealth a person inherits – hard work, talent, and perseverance still matter a great deal. We’re firmly in a meritocracy, but that doesn’t mean that you can’t give your dependents financial support and a leg up – or that luck can’t play a part.
Preparing the next generation for an inheritance through financial education and instilling important money lessons early can ensure they have the tools to be financially stable and make the right decisions for themselves. You’ll need to think carefully about the support you offer.
Firstly, while it’s natural to want to support loved ones, you shouldn’t do so at the expense of your own financial security.
If you can afford to give your children money now, will you regret the decision in 20 or 30 years? Will your retirement look different without that money, and is that a compromise you’re willing to make? If the financial help you intend to give comes from an emergency fund, it’s possible you can’t afford it, or that you’ll regret the decision if disaster strikes.
Once you decide financial support is affordable, you’ll need to think about whether the money you give will be a gift or a loan and be sure to legally document it either way. This not only ensures that everyone is on the same page but could protect you if your child’s relationship breaks down, for example, and help to keep your money in the family.
Consider, too, the tax implications of a gift. We can help here, so get in touch if you need help understanding gift rules or worry about leaving a significant Inheritance Tax bill when you die.
Get in touch
Please email hello@globeifa.co.uk or call us on 020 8891 0711 to discuss how Globe IFA’s expert financial advisors can help you manage your long-term financial plans.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
