A staggering number of young Australians have relied on the Bank of Mum and Dad (BOMAD), their family, friends or partners to beat the cost-of-living crisis, according to a recent Compare the Market survey.*

More than half of Gen Z (51%) and almost a third of Millennials (31%) had asked their families for help with money during the past 12 months.

A quarter of Gen X and over 10% of Baby Boomers had also turned to parents or siblings for support.

One in ten Australians also said they’d relied on their spouse or partner to meet living costs while 6% had tapped into the goodwill of friends.

Data sourced from Compare the Market’s August 2023 survey of 1004 adult Australians.

Compare the Market’s Economic Director, David Koch, said it was no surprise when young Aussies were facing the “double whammy” of higher interest rates and inflation.

“It is tougher for this generation. The issue is first home buyers have only ever known cheap money,” Mr Koch said. “They’re having to change their lives in a much more dramatic way than my generation.

“Grumpy old baby boomers will say ‘we were paying 17% mortgages’. Well yes, but you had a much smaller loan and salaries haven’t increased in a commensurate way to the increase in property prices.

“So, when your kids call and whinge that they have it harder, they really do.”

Mr Koch said it was reasonable then that so many parents were dipping into their savings to support their children.

He said in cases where parents were supporting children with a home loan, it could be beneficial to have some conditions in place.

“You want to help but you don’t want that to impact your financial future as well, particularly if you are retired and living off your savings,” Mr Koch said.

“If you can help your children, put a process around it to take the awkwardness and emotion out of it.

Anytime you lend anyone money, you want to make sure you’re going to get it back.  Consider agreeing some rules as to when you’d ideally want to be repaid – that could be a regular repayment or in one lump sum.”

Although the outlook for young homebuyers may be gloomy, Mr Koch said that Gen Y and Z would eventually catch up with their parents.

“To a young Australians there has always been a wealth gap but once they have been a beneficiary of time and their assets continue to grow, they will be in a better position too,” Mr Koch said.

Kochie’s tips for supporting family members with money

Ask yourself if you can actually afford it

Although you would love to help your friends and family out, make sure you consider your own personal circumstances. You shouldn’t put yourself in a situation that could jeopardise your financial security.

Are there alternatives?  For example:

• Can you go guarantor for their home loan? If this is the case, make sure you put terms in place and secure the home against a certain percentage of the loan.
• Can a bank or financial institution help them? This could be beneficial as it would reduce the risk of personal problems later on.
• Could some independent financial advice be useful to help set them up for the longer term?

If you do say yes

Consider detailing the loan terms, such as the amount provided, parties involved, and repayment schedule. Both you and the borrower would usually keep a copy. That way, you have set out the terms of the agreement, which should negate any confusion later on.

*Survey of 1,004 Australian adults, conducted in August, 2023.

For more information, please contact:  

Natasha Innes | 0416 705 514 | [email protected]

Compare the Market is a comparison service that takes the hard work out of shopping around. We make it Simples for Australians to quickly and easily compare and buy insurance, energy, travel and personal finance products from a range of providers. Our easy-to-use comparison tool helps you look for a range of products that may suit your needs and benefit your back pocket.