Over 60 per cent of Australian parents are supporting their adult children financially, according to a new study.
A new survey of 2,011 Australians, conducted by comparison website finder.com.au, has revealed that 61 per cent of parents provide financial assistance to their adult children.
When asked why they support their adult children, 16 per cent of parents said their children were struggling to manage money, with 10 per cent noting that they help their adult children because they don’t have a job, 11 per cent helping their children while they study, an additional 11 per cent assisting their children with a home deposit, and 9 per cent offering financial support because their children are in debt.
According to Finder’s money expert, Bessie Hassan, parental support may be preventing adult children from gaining financial independence.
“There’s no denying the transition to adulthood can be confronting, especially with the rising cost of living, but leaving the money ‘training wheels’ on for too long can do more harm than good,” Ms Hassan said.
“It can’t always be mum and dad to the rescue.
“Giving too much support can make it harder for young adults to understand the true value of money and how to manage financial adversity when things don’t go according to plan.”
Ms Hassan added: “Millennials often get a bad rap for being lazy, but remember, young Australians are studying for longer these days which may delay their entry into the workforce.”
However, with 11 per cent of adult children seeking assistance for a home deposit, principal of financial solutions firm PAZE Financial John Valentine suggested that first home buyers (or first-time buyers) purchase property with family equity guarantor support.
“First-time buyers who have minimal savings or who face high price barriers to realise their dream of home ownership should know that they can get help from their parents or other family members to help secure a deposit for a mortgage,” Mr Valentine said.
“Under the family equity guarantor’s support policy or an equity loan on their home, parents or another immediate family member can help a first home buyer purchase a property.”
Mr Valentine added: “The guarantee is for a portion of your loan amount, not the whole amount.
“The advantage of a family guarantee is it reduces or avoids lenders mortgage insurance and it enables you to maximise the amount you can borrow. Obtaining the family guarantee involves no extra costs.”
From Mortgage Business