How the Looming Independence Deficit is Shaping Millennials and Gen Z's Financial Landscape

2023-12-06 10:57:05

A Substantial Number of Young Adults Still Benefit from Parental Support on Phone Expenses

A recent survey indicates that about 32 percent of adults from ages 18 to 35 continue to enjoy the financial perks of having their phone expenses covered by their parents. In addition, a slightly higher percentage, standing at 35 percent, are using their parents' TV streaming service logins.

The variety of expenses paid by parents doesn't stop with communication and entertainment; they extend to utility bills for 30 percent of these young adults, housing costs for 32 percent, and even insurance policies for 22 percent.

Virgin Media O2, concerned about consumer smartphone overpayments amounting to more than £530 million annually, highlights the issue of millions possibly overpaying for their devices post-contract. This costly oversight results from network providers not automatically or adequately reducing customers' bills after the cost of the phone is covered.

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Rob Orr, Chief Commercial Officer at Virgin Media O2, underscores this issue's significance, particularly in today's economy. "In the current economic climate, people can ill afford to waste money paying for phones they already own," Orr expresses.

He urges everyone, especially parents financing their children's phone contracts, to ensure they are not billed for devices that have already been paid off. "It’s crucial to avoid the pernicious practice of smartphone overpayments," he added.

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The Cost-of-Living Crunch

The study further unveiled the financial strain felt by younger generations. The individuals surveyed estimated an average bill increase of £154.49 since early 2023, with parents contributing an average of £46.10 monthly, totaling over £550 a year to help their children.

About 26 percent of these young recipients carry feelings of guilt for depending on their parents, and 38 percent worry about the possibility of reduced support in the next year. Despite this, a small percentage of 12 percent expect their parents to provide financial assistance.

There's a sense of financial disparity between generations, with 45 percent of young adults perceiving their parents as having had better financial leverage, and 55 percent believing that achieving homeownership is more challenging now than it was a decade ago.

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Those who aren't reliant on parental aid are 40 percent more likely to find current mortgage rates expensive, and 38 percent more inclined to view inflation as excessive in comparison to their supported counterparts.

The Reciprocity of Family Finances

Interestingly, the financial support is bidirectional, with 37 percent of 18 to 35-year-olds contributing towards their parents' bill payments as well. Streaming services like Netflix, utilities, and phone bills are among the most assisted expenses by the younger generation.

Key motivations for assisting parents financially include the desire to help, express love, and reciprocate the support they received growing up, each constituting 37 to 38 percent.

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Vital Tools to Curtail Overpayments

Rob Orr emphasizes importance of vigilance, especially amid the cost-of-living crisis, and reiterates the need to only be charged for what one owes. Virgin Media O2 has developed an online mobile overpayment calculator that allows consumers to quickly identify if they've overpaid for their smartphones.

Orr assures customers that O2 automatically reduces bills post-contract, preventing further overcharge. If you buy your phone directly from O2, we'll automatically reduce your bill once your contract ends so you don’t pay a penny more than you should for your handset," Orr clarifies.

He alerts that "Millions are overpaying for smartphones on deals with other providers which have already run their course," pinpointing the urgency for parents who pay for multiple contracts to be proactive to avoid unnecessary expenses for devices that should already be theirs outright.

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