Top 4 tips for the Bank of Mum and Dad

It’s no secret, it’s tough nowadays for the younger generation to step onto the property ladder. Naturally, if you see your kids struggle, you want to help them out. But is providing financial assistance going to put your retirement at risk?

Key learnings:

  1. Key insights about the Bank of Mum and Dad
  2. Key financial considerations
  3. How we can help. 

There’s no official research, but the Bank of Mum and Dad is a big player in today’s financial market, with some even labelling it Australia’s 5th largest bank.  Collectively it loans about $35 billion to its offspring, which averages out across Australia to around $33,000 to help with a house deposit.

That’s a big chunk of change and perhaps years of saving, so putting some thought into the logistics can give them a leg up and help keep your retirement secure.

Here are our top 4 things to consider before you become the Bank of Mum and Dad. 

1.    Know your numbers

Before you offer to help, know how much you can afford. You’ve worked hard to put yourself in a good financial situation, so you also need to consider your future along with theirs. To peek into the future have a look at the Retirement Income Calculator. This can provide an estimate of your future income in retirement, and help you understand how it could affect your lifestyle.

2.    Clear, upfront communication

Set boundaries about how and when you can help. Will your financial support be a gift, or do you expect to be paid back? Is this a one off, or can you afford to help more regularly? Having a conversation about your expectations and how this will affect your own personal finances might help avoid conflict further down the track.

3.    Consider a written agreement

If you expect to be paid back, it’s a good idea to make it official with a signed and dated loan agreement. Remember to include things like the amount loaned, how long the loan is for, if any interest is to be paid and the method it should be repaid.

4.    Seek advice

When large sums of money are involved it’s not a bad idea to seek advice. Do you have trusted friends in similar positions? Find out how they handled the financials and learn from any mistakes they made.

And don’t forget, as part of your CareSuper membership you can give us a call for simple super help, or for more tailored advice you can talk to an experienced financial planner for a competitive fee.

We’re here to help through all of life’s twists and turns, so call us on 1300 360 149.


Information correct as at 18 June 2024.