One in five parents are putting themselves at financial risk by helping their children during the pandemic.
Research from consumer comparison site mozo found 67 per cent of parents are taking money from their savings to assist their offspring, while 37 per cent have cut back on their expenses in order to help.
“COVID-19 has been a financially devastating time for many Australians, with younger generations particularly hard hit as they’re more likely to be in customer-facing or service-related jobs, or just starting out in their career,” Mozo director Kirsty Lamont told The New Daily.
“It’s only natural that parents want to step in to help struggling adult children.”
Mozo found 30 per cent of parents with adult children were providing some form of financial assistance and estimated that parents had spent $26.8 million on their children since the start of the pandemic.
Up to 10 per cent of parents are covering their children’s bills – at an average cost of $130 per week.
Adults returning to live with their parents were dubbed “Generation Boomerang” in May, when similar research from finder.com.au found that 26 per cent of all households – 1.5 million families – had an adult child living at home. One in five or 331,000 had recently returned home because of the COVID-19 crisis.
Australians aged 20 to 29 were among the worst affected by job cuts in the food services and accommodation sector, with 40 per cent unemployed.
From the middle of March to May, 18.5 per cent of jobs for people under 20 disappeared, and 11.8 per cent of jobs worked by people under 30 disappeared.
“From young professionals who have lost their jobs, to expatriates returning from overseas, COVID-19 has had a negative financial impact on many Aussies,” said finder.com.au personal finance expert Kate Browne.
“Some have no choice but to move back in with mum and dad. Others may have also moved back home to help their older parents during the lockdown.
“There are some very vulnerable people in the community, so having the option to move in with family and help out around the house is a good thing,” Ms Browne said.
“Many adult kids are returning to their childhood bedrooms, setting up workstations in the dining room and asking, ‘What’s for dinner?’
“While some parents will be delighted to have kids move back in, whether or not they can handle an increase in the energy, water and food bills remains to be seen.”
Financial adviser Helen Baker told the ABC the situation could present financial and social challenges.
“You’ve got people who have been independent and living on their own having to adjust. [There’s a] sense of uncertainty; the fear that they are never going to get back on their feet again,” she said.
“Then [there’s] the burden that may be put on parents who weren’t in a great position financially to start with. Then there’s the privacy factor, a lot more people in a smaller space.
“There will be some who will thrive through the process. They will get time with their kids and grandkids. [But] it could turn out to be a disaster.”
Many Australians under the age of 35 – have taken money from their superannuation accounts to cover their living costs.
EY chief economist Jo Masters told The New Daily prior to the pandemic, the ‘bank of mum and dad’ was the 10th largest lender in the country because of the precarious labour market facing their children.
Ms Masters said the short-term impact of the return of children would be reduced levels of discretionary spending among parents.
Have you had offspring move back into the family home because of financial issues? If so, has the arrangement been a success or a strain?
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Related articles:
https://www.yourlifechoices.com.au/government/centrelink/am-i-a-nonhomeowner
https://www.yourlifechoices.com.au/age-pension/news/help-poorest-pensioners-first
https://www.yourlifechoices.com.au/government/centrelink/an-age-pension-for-all-australians
