Over coffee at a Melbourne cafe, friends Phil and Nick are both gearing up for a new chapter in their lives — grandchildren.
“We’ve promised to do two days a week of child care, which will help because it costs a lot of money,” Nick said.
“If [my children] paid another two days’ child care it would hurt. It wouldn’t break them but it would hurt.”
Both men have helped their kids out with money for a home deposit, and continue to provide financial support with groceries, child care, and eventually school fees.
“Cost of living is a constant with them, even though they’re doing quite well … things are just too expensive and they’re realising it, and we’re realising it, and I think everybody is,” Phil said.
“We’ll help them in any way we can.”
Melbourne mother of two Grace also regularly helps her adult children with expenses.
“It could be something like the cat needs dentistry done and they don’t have that spare cash lying around, just things like that, could be furniture, buying a brand new phone,” she said.
“Who knows, hopefully one day [they’ll] be able to look after me.”
Financial independence is something Sydney father of three Dave (not his real name) wants his children to learn.
But he also knows how much they’re struggling in the current economic climate, so instead of providing cash for a house deposit, he rewards their hard work by covering mortgage repayments.
“It’s a different way to go about it. When [my son] called to say they bought a house, I asked what the mortgage repayments were — they were $3,000 a month.
“We told them we would pay the first six months.”
Dave asked not to use his real name because his other children don’t know about the assistance he’s providing to their sibling.
“We haven’t told our son not to tell anyone but it’s not something we’re broadcasting to the rest of the family,” Dave said.
The decision has meant Dave has chosen to work longer than he expected.
“We could retire now but we want to be in a position to help the kids as much as we can.
“They’re in a different world than it was for us; property is horrendous.
“You look at my generation and think they had it a lot of easier, but I wonder whether we’re paying the price now for that by working extra years to be able to provide the financial support for the kids.
“Is that the price baby boomers are paying?”
‘Bank of Mum and Dad’ diversifies into living expenses
As cost of living pressures persist, more parents and grandparents are stepping in to ease the financial strain.
From covering childcare fees to helping with house deposits and everyday expenses, the so-called ‘Bank of Mum and Dad’ is playing an increasingly crucial role in household budgets.
Investment manager UBS surveyed 1,000 Australian adults — it asked whether respondents had received money from, or given money to, family over the past 12 months. Around half said yes.
The majority of funds given to adult children from parents and grandparents was spent on everyday living expenses like groceries, insurance, petrol, and bills, the survey found.
USB equity strategist Richard Schellbach said it marked a shift from the “traditional” role of the Bank of Mum and Dad, focused on helping children secure a deposit for their first home.
“It’s not just a property market related story, it feeds through to regular consumption. It’s a new reality. It’s certainly part of the landscape now, and it’s not going away,” he said.
“That’s why the consumer in Australia has been able to weather the interest rate hikes over the last few years far better than we would have thought, because they’re getting help with their weekly bills and food and utility expenses.”
After living expenses, the second most common use of family-provided funds was mortgage interest payments, while home purchases ranked third.
The financial contributions were also growing, with most exceeding $100,000 — and many surpassing $200,000.
Trent Wiltshire from the Grattan Institute’s economic prosperity team said the reason was clear.
“Back in the 90s, the typical older household had about three times as much wealth as a younger household,” he said.
“Now it’s about five times as much wealth as a younger household.
“That divide is growing so parents helping, or grandparents helping with more day-to-day expenses is [the result] of high inflation [and the] cost-of-living crisis we’ve had for the last few years.”
Growing reliance on grandparents
Of those surveyed by UBS who had family financial assistance, 70 per cent said they had received cash from their parents to help with housing and living expenses, but 15 per cent said the money was provided by their grandparents.
“We don’t have time series data on that to know how impactful it was five, 10, or 20 years ago,” Mr Schellbach said.
“But there’s no doubt that this is something that has grown off a very low base.
“What we’re in now is probably the first generational period of time where these transfers from parents to adult children and grandparents to adult children are actually meaningful and significant.”
Figures from a rolling survey of 52,000 Australians by Digital Finance Analytics show first-home buyers are increasingly relying on their parents and even grandparents to enter the property market.
Of first-home buyers who relied on family to secure a home deposit in 2024, almost 80 per cent received the money from their parents — a drop from 99 per cent in 2015.
Meanwhile, more than 12 per cent relied on their grandparents last year — up from 5.2 per cent in 2021.
Contributions from other family members such as siblings also increased to 8 per cent.
Data scientist and founder of Digital Finance Analytics Martin North said the “Bank of Mum and Dad” was becoming an outdated term.
“We should be talking about the ‘family bank’, because there is a significant flow of funds now from various points of intergenerational connection to enable people to get into the market,” he said.
“Affordability is completely broken. So we have a bifurcation in the market — those with help from parents can buy, those without help can’t, and that’s a problem.”
The average amount provided by the bank of Mum and Dad nationally increased to $112,436, compared to $108,463 in 2023.
In NSW, the average amount given was $212,000, while it was $137,000 in Victoria.
However, the national average was lower than in 2021, when contributions hit almost $120,000 during the pandemic-induced property price boom.
Mr North said help from family had “laid the seed for a long-term problem”.
“The reason that most parents have money to hand down is because they are sitting in property that’s gone up in value.
“It’s the accelerated growth in property over a generation or two that has given them the wealth to enable them to pass it down to the next generation, which means that it’s perpetuating a process.”
