Are you ready to stop buying avocados and buy a house, or wait for an inheritance?

Those clever people at the Office of National Statistics (ONS) have created an interactive calculator so the younger generation can compare their financial situation with their peers.

Analysis has shown that those aged 22-29 have become less likely to own their own home and have money set aside as savings, but they are also less likely to be in debt.

The median salary in this age bracket is just over £20,000 and reported to be below the national average of £27,000, you can see why it can be challenging for this age bracket to save and buy a house.

Interestingly, in May 2017 there was an article in which a millionaire property mogul was reportedly blaming millennials’ choice of breakfast as the reason that they couldn’t afford to buy a house! Have a read of it here:

For those with a desire to save to buy their first home, the use of Government initiatives may prove worthy considerations. Both the Help-to-Buy ISA (H2B) and the Lifetime ISA (LISA) provide additional bonuses to help you get your foot on the housing market.

H2B ISAs receive a Government bonus of £50 for every £200 saved towards a house deposit. You can save up to £12,000, so the maximum available bonus is £3,000. The bonus can only be paid at the point where you’re purchasing your first home though, so you won’t receive it if you withdraw it for other reasons.

Alternatively, you could use a LISA, which gives you £1 for every £4 you save towards a property, but you can only contribute a maximum of £4,000 per year and you’ll be penalised if you withdraw for reasons other than buying a house, or prior to reaching the age of 60.

Worthy of note was the introduction of the Personal Savings Allowance (PSA) in 2016 which allows UK savers to earn up to £1,000 of interest free of tax if they are a basic rate tax payer. Higher rate tax payers can earn £500, but Additional rate tax payers must pay income tax at their highest level. There is no PSA for savings held in ISAs as these remain free of income and capital gains taxes meaning savvy savers could utilise their allowances in both ISAs and deposit savings.

Anyone thinking that they can rely on an inheritance from their parents or grandparents may be wise to think again. A report from Royal London estimates that millennials with parents and grandparents living in owner-occupied accommodation and likely to benefit from inheriting their wealth are in the minority. Only four million out of the seventeen million people in the 25-44 age bracket might benefit from the older generation’s generosity of an inheritance.  This means there’s a greater reliance required on themselves to save.

Interestingly though, when asked whether they would be disappointed if they did not inherit wealth just 39% said that they would be disappointed not to receive an inheritance from their parents and a mere 23% said the same about a potential inheritance from their grandparents.

Does this mean that the older generations are more focused on giving a bequest than younger generations are on receiving one? It certainly seems so and there is a marked difference between the views too identified in the report. The vast majority of the younger generation want to see their parents and grandparents enjoying their wealth whereas the older generation seem more focussed on passing it on.

Either way, if you’re keen to get yourself on the housing ladder, it’s best to be in control of your own saving and spending so if you find you’re spending more money buying avocados than saving, now might be a good time to turn it around.

For advice on buying your first home and planning for the future, get in touch with one of our financial planning and wealth management team on 0808 144 5575 or visit our website for more information.

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