The “bank of mum and dad” is no longer solely a tool to help loved ones enter the property market; it is increasingly being used to cover everyday expenses amid the ongoing cost of living crisis. This shift highlights the financial strain families face in maintaining stability and supporting one another.
Growing Reliance on Family Financial Aid
Research conducted by global financial services company UBS, surveying 1,000 adults, revealed that about 40% of respondents either gave or received financial assistance from family members in the past year. The most common forms of aid included:
- Cash payments for day-to-day expenses.
- Assistance with mortgage interest payments.
- Contributions toward home purchases.
These findings underscore how families are stepping in to bridge financial gaps created by rising costs and economic pressures.
Significant Sums for Property Assistance
Despite the growing focus on everyday expenses, the property market remains a key area where familial financial support is channeled. The survey showed that many “bank of mum and dad” contributions exceeded $100,000, with a substantial number surpassing $200,000.
These figures reflect the rising challenges of property affordability, driven by high interest rates and soaring home prices. UBS commented on the trend, emphasizing that such large sums are becoming routine as housing affordability diminishes.
Grandparents Stepping in to Help
In addition to parents, grandparents are increasingly providing financial support, accounting for 14% of familial monetary transfers. Their contributions often fund school fees and extracurricular activities, further emphasizing the role of intergenerational wealth in sustaining household budgets.
Navigating Family Dynamics and Financial Agreements
While family financial assistance can provide crucial support, it also comes with potential pitfalls. Experts recommend clearly defining the terms of any monetary transfer to avoid future misunderstandings or disputes.
Psychologist Peter Quarry advises families to address key questions early on:
- Is the money a gift or a loan?
- Will the giver act as a guarantor for financial agreements?
Documenting agreements, clarifying intentions, and considering “what-if” scenarios are critical steps to maintaining healthy family dynamics while navigating financial aid.
