the ‘bank of mum and dad’ is increasingly helping fund the lives of young Australians

Much has been made of the increasing presence of the “bank of mum and dad” in the lives of Australians.

We know financial support from parents to adult children is increasingly used for entering the housing market.

But our new research shows parents are also helping their young adult children in other ways, including with meeting everyday expenses.

We’ve gained new insights into who is receiving support from parents and what it’s used for.

So what does this look like in practice, and what does it mean for intergenerational inequality in Australia?

Parental financial support becoming commonplace

We have surveyed a diverse group of young Australians for almost 18 years, since they were in year 12 in 2006.

This has allowed us to follow the trajectory of a cohort of millennials as they have transitioned to adulthood.

One of the areas we ask about is their sources of financial support.

This includes their own income, savings and investments, and government support, but also gifts, loans and other transfers from their family.

Our findings show that financial support from family – typically parents – has become important for this generation well into young adulthood.

This support from family was very common for our participants when they were in their late teens.

Perhaps more surprisingly, for many this support continued into their 20s and, for a significant minority, into their late 20s and beyond.

So is it only rich parents providing this assistance?

Turns out, not really.

Our results show young adults from diverse socioeconomic backgrounds get financial help.

Surprisingly, the educational level and occupation status of their parents did not predict whether our participants were receiving support.

Parents with higher education and in managerial or professional careers are providing financial help.

But so too are parents of more modest means, even if the amount of support they can provide clearly differs.

It’s not just about houses

Our participants are using this support to pay basic expenses.

One in five 32-year-olds in our study report struggling to pay for three or more basic expenses (we ask about food, rent or mortgage repayments, house bills and healthcare costs).

These young adults are three times more likely than those not facing this struggle to report receiving financial support from their family.

These gifts and loans are also used to support parenting, and to support those working part-time out of choice or necessity.

Leave a Reply

Your email address will not be published. Required fields are marked *