Finder Bank of Mum and Dad Report 2020

Australian adults are getting by with a little help from mum and dad. A nationally representative Finder survey of 1,011 adults asked 445 parents with children over 18 about the financial support they provide to their kids.

What is the "Bank of Mum and Dad"?

Most adult kids fly the nest eventually, but for many, financial support from their parents remains ongoing. Finder research shows that almost half (44%) of Australian parents help their adult offspring out with expenses.

How much are parents contributing?

According to Finder's research, almost a quarter of Aussie parents (23%) pay for their adult children's groceries.

Around 17% allow their adult children to live at home rent-free, while 7% charge board or low rent. A further 14% cover their adult children's bills, while 1 in 10 (9%) provide free childcare for their grandchildren.

That same number (9%) fork out for their child's car-related costs like registration fees and petrol, while 6% pay for or subsidise tertiary education. Travelling isn't off the cards either, with 7% of parents forking out for some or all of their adult children's holiday costs.

Which state is home to Australia's most generous parents?

South Australia has the highest proportion of parents who support their adult kids financially, with over half opening their wallet (54%). This is followed by Victoria, where 1 in 2 parents (50%) help out their kids with money.

But adult kids in Western Australia might feel they are on their own by comparison. In WA, just 34% of parents provide financial assistance, but keep in mind that this still accounts for 1 in 3 parents.

Parents are also mortgage lenders

As any first home buyer knows, property in Australia is notoriously expensive, especially in capital cities. A recent study by Domain found that it would take a couple aged 25-34 years old 6 and a half years to save a 20% deposit for an entry-level house price in Sydney ($680,000), and 6 years for a similar property in Melbourne ($600,000).

Unattainable property prices mean that many young Australians require a financial leg up to get a foothold in the market. Finder's research shows that 7% of parents have either chipped in for a house deposit, while 3% have gone guarantor for their child. But the funding doesn't stop there – a further 3% of parents help their children out with mortgage repayments as well.

How to financially support your adult kids

Offering financial support to adult kids can be the big break they need to get ahead, especially for big-ticket items like a home loan or tertiary education. But this generosity can sometimes come at a cost. That's why as a parent, it's important to ensure to safeguard your own financial position and be realistic about the potential risks involved.

• Encourage financial literacy. It's never too late to teach children (or grownups) how to handle money responsibly. Teach them how to save, compare bank accounts and how to set up their own emergency fund. If you are comfortable, talk to them about some of your own financial mistakes in the past so they can learn from them.
• Protect your own emergency account. Make sure you have an emergency stash of cash set aside that is for your own personal use. You never know what the future may hold, and it's important you have enough to cover any unexpected costs like emergency medical care, car trouble or vet bills.
• Set up a payment plan. If you lend money in the form of a 'loan', draw up an agreement so repayment expectations are clear from the start.
• Make informed decisions. If you agree to go guarantor on your child's home, make sure you've researched all possible options (including best and worst case scenarios). It can be a good idea to see a mortgage broker or financial planner together, to ensure you're making the right decision.
• Help your kids to help themselves. Everyone falls short of cash from time to time. But if this is becoming a regular occurrence for your kids, they may have budgeting or cash flow issues. Brainstorm ways they could support themselves, this may be through a second income stream, new job or downgrading their lifestyle.