More Aussies are relying on the ‘Bank of Mum and Dad’ to navigate the cost-of-living crisis, with a growing number of parents and grandparents digging deep to support their children and grandchildren.
Recent research from Compare the Market found that one in six older Australians (15.9 per cent) have purchased clothes, toys or other essential items for younger family members over the past year. Close behind were gifting money (14.5 per cent) and providing free care (13.7 per cent).
Highlighting the ongoing impact of rising prices, the study showed that a significantly higher proportion of parents and grandparents are now offering financial support across a range of areas — with 93.3 per cent doing so, compared to just 73.3 per cent last year.
Economic Director David Koch said the findings show just how vital older Australians are in helping younger generations weather increasing cost-of-living pressures.
“Baby Boomers are often blamed by fuelling inflation with their spending. After all, we haven’t faced the same intense cost-of-living pressures that have made the ‘Great Australian Dream’ seemingly feel impossible today,” Koch said.
“But in fact, 93% of parents and grandparents now support their younger generations in some way to combat the rising cost of bills, groceries and other essentials – a 20% increase compared to last year.
“Whether it’s simply cooking for them or contributing money, this intergenerational wealth transfer is proving to be an essential ‘third income’ for many Australians to save hundreds – if not potentially thousands per year.”
For many older Aussies, the instinct to lend a helping hand to children or grandchildren comes naturally.
But it’s important to set up boundaries to ensure your generosity doesn’t chip away at your own retirement savings. After all, you’ve worked hard to build financial security — and you’ll need it to cover your own future expenses.
While it may be tough to turn your children down when they are in need, there are plenty of ways to support your loved ones without breaking the bank.
Before offering financial help, it’s important to check where you stand. The ASFA Retirement Standard recently revealed that couples aged around 65 now require $75,319 per year for a comfortable lifestyle, while singles need $53,289. Factor in your own costs for healthcare, everyday living, and even future aged care needs before assigning a dollar amount to helping out loved ones.
Handing over cash may feel easiest, but it’s not always the smartest option. Instead, think about helping in practical, targeted ways:
This way, you’re easing their financial pressure in meaningful ways — without losing track of where the money goes.
Sometimes, a child or grandchild just needs a little short-term help. Offering an interest-free loan can be a safer choice than an outright gift.
The key is clarity:
This approach offers support while also encouraging responsibility.
Saying “no” when your kids or grandkids ask for help can feel almost impossible — and you’re certainly not alone in that dilemma. But by offering targeted support, setting clear boundaries and thinking strategically about how you give, you can continue to be generous today without jeopardising your own tomorrow.