Should you help your older children financially? Aussie Redditors weigh in
- Replies 9
It is not unheard of for ‘the bank of mum and dad’ to support children long after they’ve flown the coop. But should you do it, and is it a sound financial decision?
An Aussie asked Reddit - a social news site - for advice from fellow parents who are interested in personal finance.
The Redditor said: ‘You hear plenty about those who utilise the bank of mum and dad, but many younger home buyers tend to not talk about that part and instead try to claim the feat of buying their first house as their own.
‘So I thought I’d ask if anyone here with older children helped them get their first property - what exactly did you do to help and how did you go about it? Also, for anyone like myself, what are you planning, or hoping, to do to help your own kids?’
They provided more background: ‘As for our kids, I’m not sure how much I’ll be able to help directly. We have three, so helping with three deposits will be costly. When each of them was born, we opened a bank account in their name, put $300 in to start it off and have been putting in $5 every week. For years it sat there earning pitiful interest until we finally learned about investing, and it’s now in good old VDHG (Vanguard Diversified High Growth). So once they’re ready, we will gift [it to] them. Other than that, we’re just doing our best to teach them good money habits. The six-year-old has a long way to go, but the older two are figuring it out.’
Redditors shared their personal experiences.
One said: ‘It depends on your definition of help: Did I get a cash handout? No. Was I able to live at home during my uni days and early working years (3-4 years working full time before I moved out) whilst paying a pitiful rent to my oldies ($50 a week!), allowing me to accumulate a deposit? Yes. Different strokes for different folks.’
Another had a similar story of living with their parents in their early 20s: ‘I was allowed to stay home rent-free until I was 25 as long as I was saving towards a mortgage. It meant I could buy a small unit by myself. I’m planning on the same for my children.’
This is fairly normal for many young adults. The Australian Institute of Family Studies found that 43% of 20–24 year-olds were living in their family home in 2016, a 7% increase compared to the data in 1981. In the past, 17% of 25-29 year-olds stayed at home in 2016, compared to 10% in 1981.
In 2021, the Australian Bureau of Statistics found that there were more young adults living with parents than owning properties. The number was up 17% since 2016. Besides the financial strain caused by the coronavirus pandemic, the phenomenon was attributed to rising living costs, lower marriage rates, and diverse cultural backgrounds in the country.
Aussie parents want their children to spread their wings but also have a backup in case things turn awry. A Redditor shared: ‘My partner and I are planning to buy a larger home eventually, so all the kids can stay home as long as they need/want to, to save a deposit, study etc. Ideally, we'll also buy a property with space for their partners. Something with a guest house would be amazing, so they can visit when they have families of their own and still have some privacy.’
They said that while there is an obvious power imbalance to the dynamic, and they hate mixing family and money, it could help their children in the long run: ‘I think the biggest gift my partner and I can give them though isn't financial, it's being a safety net. So whatever choices they make, they'll always be safe to come home and we'll always have space for them. I think that kind of security allows people to reach a bit farther and take bigger risks for themselves, and hopefully, the kids feel more supported to be a bit more ambitious.’
Another commenter is preparing things way ahead before their child can set out on their own: ‘I bought my child a home using the savings I had for them since they were one which we currently live in. When they are old enough, I will transfer it to them. I have a savings account where their child support gets deposited, which will be used for a car when [they’re] old enough. I also have a minor trust in which I regularly invest. They are my sole benefactor for my super, life insurance, and various investments. My child has not reached double digits in age.’
Others were less inclined to help, or did not want to tell their children they had any plans to do so.
A Redditor said: ‘My wife and I have essentially done it all ourselves. Moved in together into a rental ($280 per week), paid for our wedding, and now we’ve managed to put $50k aside for our house deposit and still building it. Haven’t taken any help from parents (my main reason being pride and I don’t want to feel like I’m bumming off of their years of hard work). I was also very aware of the money situation growing up so I didn’t want to make it any more difficult.
‘My wife and I now have a child of our own. I’d like to be able to help them get through university if they wanted to go that path, but I’m not sure about helping with a house. I’d like to think if they’re financially intelligent enough to maintain a home they’d be financially intelligent enough to save for it.’
Another said that the knowledge you impart is crucial: ‘I just think the best way I can help them financially is to raise them to be finally responsible. And hopefully leave them an inheritance one day.’
Meanwhile, one Aussie shared: ‘Give them nothing but financial education and help with resumes. This will teach them the value of having to work for what they want. I will not tell them but I’m planning to give each of them a large sum of money to buy house say $100k-$200K.’
A survey from Finder found that 44% of Australian parents support their adult kids financially, with 17% letting children stay at home without rent, 7% chipping in for a house deposit, 3% becoming guarantors for their child’s home purchase, and another 3% contributing to mortgage repayments. Parents also helped with groceries, utility bills, and childcare.
The research also discovered that South Australian parents were more willing to help their children with money (at 54%) than their counterparts in Western Australia (at 34%).
‘It seems that parents feel responsible for ensuring their kids are on a sound financial footing, no matter how old they are,’ Finder Insights Manager Graham Cooke said.
He added: ‘Many parents want to help their kids enter the housing market while conditions are favourable – the combination of low-interest rates, price dips and government schemes won't last forever.’ In fact, we’ve already seen the rise of interest rates.
While having peace of mind that your children will turn out okay is priceless, it is also important to protect your financial position. You never know what might happen, as is the case with the global pandemic and rising inflation rates. Here are some things you can do to secure your finances:
An Aussie asked Reddit - a social news site - for advice from fellow parents who are interested in personal finance.
The Redditor said: ‘You hear plenty about those who utilise the bank of mum and dad, but many younger home buyers tend to not talk about that part and instead try to claim the feat of buying their first house as their own.
‘So I thought I’d ask if anyone here with older children helped them get their first property - what exactly did you do to help and how did you go about it? Also, for anyone like myself, what are you planning, or hoping, to do to help your own kids?’
They provided more background: ‘As for our kids, I’m not sure how much I’ll be able to help directly. We have three, so helping with three deposits will be costly. When each of them was born, we opened a bank account in their name, put $300 in to start it off and have been putting in $5 every week. For years it sat there earning pitiful interest until we finally learned about investing, and it’s now in good old VDHG (Vanguard Diversified High Growth). So once they’re ready, we will gift [it to] them. Other than that, we’re just doing our best to teach them good money habits. The six-year-old has a long way to go, but the older two are figuring it out.’
Redditors shared their personal experiences.
One said: ‘It depends on your definition of help: Did I get a cash handout? No. Was I able to live at home during my uni days and early working years (3-4 years working full time before I moved out) whilst paying a pitiful rent to my oldies ($50 a week!), allowing me to accumulate a deposit? Yes. Different strokes for different folks.’
Another had a similar story of living with their parents in their early 20s: ‘I was allowed to stay home rent-free until I was 25 as long as I was saving towards a mortgage. It meant I could buy a small unit by myself. I’m planning on the same for my children.’
This is fairly normal for many young adults. The Australian Institute of Family Studies found that 43% of 20–24 year-olds were living in their family home in 2016, a 7% increase compared to the data in 1981. In the past, 17% of 25-29 year-olds stayed at home in 2016, compared to 10% in 1981.
In 2021, the Australian Bureau of Statistics found that there were more young adults living with parents than owning properties. The number was up 17% since 2016. Besides the financial strain caused by the coronavirus pandemic, the phenomenon was attributed to rising living costs, lower marriage rates, and diverse cultural backgrounds in the country.
Aussie parents want their children to spread their wings but also have a backup in case things turn awry. A Redditor shared: ‘My partner and I are planning to buy a larger home eventually, so all the kids can stay home as long as they need/want to, to save a deposit, study etc. Ideally, we'll also buy a property with space for their partners. Something with a guest house would be amazing, so they can visit when they have families of their own and still have some privacy.’
They said that while there is an obvious power imbalance to the dynamic, and they hate mixing family and money, it could help their children in the long run: ‘I think the biggest gift my partner and I can give them though isn't financial, it's being a safety net. So whatever choices they make, they'll always be safe to come home and we'll always have space for them. I think that kind of security allows people to reach a bit farther and take bigger risks for themselves, and hopefully, the kids feel more supported to be a bit more ambitious.’
Another commenter is preparing things way ahead before their child can set out on their own: ‘I bought my child a home using the savings I had for them since they were one which we currently live in. When they are old enough, I will transfer it to them. I have a savings account where their child support gets deposited, which will be used for a car when [they’re] old enough. I also have a minor trust in which I regularly invest. They are my sole benefactor for my super, life insurance, and various investments. My child has not reached double digits in age.’
Others were less inclined to help, or did not want to tell their children they had any plans to do so.
A Redditor said: ‘My wife and I have essentially done it all ourselves. Moved in together into a rental ($280 per week), paid for our wedding, and now we’ve managed to put $50k aside for our house deposit and still building it. Haven’t taken any help from parents (my main reason being pride and I don’t want to feel like I’m bumming off of their years of hard work). I was also very aware of the money situation growing up so I didn’t want to make it any more difficult.
‘My wife and I now have a child of our own. I’d like to be able to help them get through university if they wanted to go that path, but I’m not sure about helping with a house. I’d like to think if they’re financially intelligent enough to maintain a home they’d be financially intelligent enough to save for it.’
Another said that the knowledge you impart is crucial: ‘I just think the best way I can help them financially is to raise them to be finally responsible. And hopefully leave them an inheritance one day.’
Meanwhile, one Aussie shared: ‘Give them nothing but financial education and help with resumes. This will teach them the value of having to work for what they want. I will not tell them but I’m planning to give each of them a large sum of money to buy house say $100k-$200K.’
A survey from Finder found that 44% of Australian parents support their adult kids financially, with 17% letting children stay at home without rent, 7% chipping in for a house deposit, 3% becoming guarantors for their child’s home purchase, and another 3% contributing to mortgage repayments. Parents also helped with groceries, utility bills, and childcare.
The research also discovered that South Australian parents were more willing to help their children with money (at 54%) than their counterparts in Western Australia (at 34%).
‘It seems that parents feel responsible for ensuring their kids are on a sound financial footing, no matter how old they are,’ Finder Insights Manager Graham Cooke said.
He added: ‘Many parents want to help their kids enter the housing market while conditions are favourable – the combination of low-interest rates, price dips and government schemes won't last forever.’ In fact, we’ve already seen the rise of interest rates.
While having peace of mind that your children will turn out okay is priceless, it is also important to protect your financial position. You never know what might happen, as is the case with the global pandemic and rising inflation rates. Here are some things you can do to secure your finances:
- Don’t touch your emergency savings. It is crucial to have a backup, especially when the future seems uncertain.
- Do your research and ask the right people. For example, it’s worth knowing what risks come with contributing to mortgage payments. Besides reliable sources on the internet, you can also consult brokers or financial planners.
- Have a payment plan or a written agreement, if necessary. While it’s great to support your children, you don’t want to coddle them - encourage them to be responsible with money by having a repayment system they can follow.
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