Credit: Pixabay/CC0 Public Domain
Families helping adults with everyday expenses and more
There’s been a lot of talk about the growing presence of the “bank of mum and dad” in Australian lives.
We’re all aware that parents are providing financial support to their adult children in order to enter the housing market.
However, our latest research suggests that parents are also assisting their young adult children in other ways, including with everyday expenses. We’ve acquired fresh insights into who is receiving support from parents and how it’s being used.
So what does this look like in practice, and what are the implications for intergenerational inequality in Australia?
Parental financial assistance is becoming increasingly common
For nearly 18 years, we’ve surveyed a diverse group of young Australians, starting when they were in year 12 in 2006. This has allowed us to track the trajectory of a cohort of millennials as they transitioned to adulthood.
We ask them about different sources of financial support, including their own income, savings, investments, government support, as well as gifts, loans, and other transfers from their family.
Our findings indicate that financial support from family—often parents—has become crucial for this generation well into their young adult years.
This family support was quite common for our participants when they were in their late teens. Surprisingly, for many, this support continued into their 20s and, for a significant minority, into their late 20s and beyond.
Is it only wealthy parents who are providing this assistance? Apparently not. Our results show that young adults from various socioeconomic backgrounds are receiving financial aid.
To our surprise, the educational level and occupation status of their parents did not predict the receipt of support. Parents with higher education and professional careers are providing financial help, as are those with more modest means, albeit in different amounts.
It’s not just about homes
Our participants are utilizing this assistance to cover basic expenses.
In our study, one in five 32-year-olds report difficulty paying for three or more basic expenses (food, rent or mortgage, household bills, and healthcare costs). These young adults are three times more likely than those not facing this situation to report receiving financial support from their family.
These gifts and loans are also used to support parenting and to assist those who choose or have no choice but to work part-time.
Some of the participants working part-time in their late 20s and early 30s are not in such a precarious situation. For instance, they are receiving parental support while they pursue graduate studies in fields such as medicine or law.
While some are using support to meet their daily needs, parents are also helping their children “get ahead.”
Financial support is also used to pursue further education and manage a phase of insecure, low-paying employment on the way to a more stable and better-paid career in medicine,