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Bank of Mum and Dad in New Zealand
More than 1 million Kiwi parents are supporting their adult children financially.
For many children, financial support from their parents doesn’t stop once they reach adulthood. That’s where the Bank of Mum and Dad steps in. From helping with basic living costs to supplying enviable allowances, many Kiwi parents are chipping in to help their kids.
How common is the Bank of Mum and Dad?
More than half of parents (51%) with children aged 18 and over admit to providing some form of monetary support, according to Finder’s research.
Interestingly mothers (55%) are more likely to support their offspring than fathers (47%).
Parents from Auckland are the most likely to help out with their kids’ expenses (53%). On the other hand, those from Wellington are a little less liberal with their money (45%).
How are parents helping their children?
The number 1 way in which Kiwi parents are supporting their kids is through reducing their living costs.
More than 2 in 5 (44%) admit to paying for their children’s groceries, while 25% pay for their bills and 22% pay for car-related costs such as registration and petrol.
Nearly a third (31%) allow their offspring to live at home rent-free, while 22% say they charge discounted rent.
1 in 5 (20%) provide free childcare to their grandchildren.
Mothers and fathers provide different forms of financial support
While women are more likely to support their kids overall, there are exceptions. When it comes to buying a car (22%), funding a wedding (18%) or assisting with home loan repayments (12%), fathers are more likely to chip in.
Mothers are more likely to pay for their kids’ groceries (50%), provide free accommodation (33%) and offer discounted rent (24%).
Kiwi parents are among the nation’s largest lenders
Up to 70% of first home buyers in New Zealand receive some form of support from their parents, according to estimates from Mortgage Lab.
With the median property price surpassing $1 million, homebuyers now need $200,000 just for a 20% deposit alone.
It isn’t surprising then that nearly 1 in 5 parents who provide Bank of Mum and Dad support (19%) have given their children money for a home deposit.
Nearly 1 in 10 (9%) say they have acted as guarantor on their children’s home loan, while 7% have helped to pay their kids’ mortgage repayments.
Perhaps the biggest help of all is the 31% who provide free accommodation to their kids, undoubtedly saving them thousands of dollars on rent.
How does New Zealand compare to Australia?
Kiwis aren’t alone in operating the Bank of Mum and Dad. Australian parents are equally as likely to help out (52%).
The research found Kiwi parents are more likely to charge discounted rent for living at home, while Aussie parents are more likely to let their kids live at home for free.
Australian parents are also more likely to pay for their kids’ groceries, bills, car and even wedding costs than their Kiwi counterparts.
But more so than Australians, Kiwis are helping their kids get into the property market by contributing to their home deposit or being the guarantor on their home loan.
How to support your kids financially
Teach good financial habits. Giving your children money is a short-term solution, but at some point they will have to learn to get by on their own. Show them how to build their savings, how to compare car insurance and how to invest their money. Over time, these things will become second nature to them and they won’t need to rely on your help.
Be clear about your expectations. Discuss lending terms with your kids to avoid any awkward situations down the road. If you’re contributing to a home deposit for your child, make sure you establish who the property will belong to. If you’re providing them with a living allowance, be clear on whether they will need to pay you back.
Don’t be too generous. Make sure your habit of giving to your kids isn’t bankrupting you. At the end of the day, it’s your money. Keep an emergency savings account for your own personal use and don’t dip into it unless you need to. Your own financial security should be your priority.
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