The thought of borrowing money from your parents is an idea most of us have never entertained but it seems while we’re reluctant to dip our hands in the cookie jar, our children are not.
The Daily Mail reported that new research by Canstar revealed half of Australia’s Generation Ys borrow money from their parents after they turn 18.
But are certain types of loans reasonable over others?
While you may be thinking that a loan for a big purchase such as a home deposit or new car is justifiable, in fact the research found Baby Boomers were dishing out regularly for every day occurrences such as rent, groceries and petrol for their adult children.
Are you among them?
According to Canstar’s research, one in five 18-37 year olds borrowed money from their parents weekly or monthly and 30 per cent borrowed every year or two.
This comes following a survey commissioned by the Commonwealth Bank in April of this year which revealed one third of working Aussies were spending more than they earned on a monthly basis.
It found roughly 46 per cent of Australians don’t feel they’re making headway when it came to financial goals and 45 per cent were unsatisfied with their current level of spending while more than half (56 per cent) don’t have enough savings to cover expenses.
Alarmingly, one in three Aussie households said they wouldn’t be able to come up with a spare $500 in case of an emergency.
And as we owe a staggering $32 billion in credit card debt, or more than $4,200 of debt per credit card holder, perhaps it comes as no surprise that our adult children continually look at us like a bank.
Can you relate?
“It’s still a big proportion that says: ‘Yep, mum and dad are there, and I will use them’. Mum and dad are that bank of last recourse,” Steven Mickenbecker, Canstar’s group executive financial services, told The Daily Mail.
“You would hope that the parents have made a reasonable effort in the past to say this is a loan and it’s repayable by this time.
“Large sums or frequent small sums can hurt the parents when it comes to living in retirement when they are suddenly on a budget themselves.”
But not all parents are willing to dish out forever and one New Zealand couple recently took their daughter to court over unpaid loans.
Read more: Retired couple take daughter to court
And it seems while there are many of us who have no qualms about loaning adult children money, a new trend of defiant Baby Boomers leaving children out of their will altogether is also emerging.
The Daily Mail also reported that social researcher Mark McCrindle doesn’t see adult children borrowing from their parents ending any time soon as the cost of living continues to soar.
However he said parents acting as banks for their grown-up offspring could be missing out on investment opportunities for their future while their financially dependent children could suffer from an “extended adolescence”.
“They haven’t had that confidence, self-reliance and self-esteem that comes with funding your own lifestyle,” he said.