Shacking up with family can be relatively painful

Feel like the kids will never move out, or Mum and Dad are cramping your style? You’re not alone.

A staggering 76% of Londoners live or have lived with another generation of their family for up to a year or more – mostly because of money. In fact, almost half the capital’s population can’t afford to live in their own home, according to new figures from Aviva.

But many find that shacking up en famille doesn’t save as much as they expected; others face challenges feeding extra mouths; and arguments over money are a common occurrence.

A couple of key considerations could save the family’s finances.

Beware the small print

Failing to update your insurer about your family circumstances could mean your policy won’t pay out if the worst happens, warns Hannah Jones, an insurance specialist for comparison site MoneySupermarket. “You’ll need to contact your insurer to update them on the number of people living at the property. You may also need to increase the amount of contents cover to account for any additional items that come with the person moving in, plus covering any expensive individual items. If the family member intends to work from home, you’ll need to notify your insurer that your property will now be used as a place of work. If they smoke, bear in mind that insurers deem households with smokers a higher risk of fire in the home.”

Protecting the family

With more families relying on a few pivotal members, if anything happens to them, the ripple effect could be huge. Income protection insurance will cover the policyholder for illness, accidents or unemployment from the point you claim until 65 if necessary.

“People often think about how to financially protect their family in the event of their death, but rarely think about if they are too ill to earn a salary over a long period of time,” says Matt Morris of protection advice specialist LifeSearch. “Yet this is more likely to happen during a person’s working life. Sick pay will only last for a few months and state benefits only provide a very small safety net.”

A 55-year-old male non-smoking office worker would pay £67.26 in monthly premiums to LV= to receive £1500 a month if he needed to claim, for example. A woman in the same circumstances would pay £115.46 a month.

Budget and pay your way

More people in a home means higher food and energy bills, costing a host around £107 a month more per family lodger, despite around half of those who do move in paying nothing towards rent, the same report suggests. But after tax, the average monthly income for a family in London is £2,344, down by £133 since August 2011, so it’s hardly a surprise that one in five have had arguments over cash. An upfront conversation about how much family members should contribute before they arrive could nip it in the bud.

Surprisingly though, the average saving is just £225 per month by living with family. With the immediate pressure off, it could mean the extra cash is being spent. Sticking to a budget while living at home could mean the difference between securing and failing to raise that all-important deposit.