Should you help your adult kids with money?

What you should consider before lending money to your adult children... 

As a parent, you’re probably fairly used to helping your kids out with a little extra cash here and there. Whether it’s pocket money for doing chores, or money to pay phone bills, go see a movie or buy clothes, for example.

But what happens when they grow up, have full-time jobs and put their hands out for help to buy the bigger ticket items? They might want some money to buy a car, pay for a holiday or even get a deposit together to buy their first home.

A survey by  found that a surprising number of parents (86 percent) provide financial help to their adult children by loaning them money or giving cash handouts.

The question is, even if you can afford to help out your kids financially, should you? 

Given we are living in the world’s most expensive country it could actually provide them with a helping hand that’ll really make a difference, but ensure that you’re needs are looked after too and you’re not leaving yourself short.

Here are some things to think about if you are going to lend some money to your fully-fledged children:

  • Discuss how the money is going to be used. Is it something your child could save up for or do they genuinely need your help?
  • Decide if you want the money back. Even if you can afford it now, think about whether you might need the money for other expenses or commitments later on.
  • Agree on the terms of when and how the money will be repaid. If you decide on a loan, discuss how and when the loan could be repaid by, plus whether you will impose any sort of penalty (such as interest), if it’s not repaid on time.
  • Write it down. This might sound overly formal, but it sets the ground rules for making a true commitment to repay the loan.
  • Talk early and often to identify potential issues as they come up. Don’t wait until minor issues, such as late payments, become more serious.
  • Give them a refresher on managing money. This is a good way to really embed the principles of needs versus wants. Ask your kids to work out how much they could put aside by using our savings calculator or budget calculator. Or read about what options they have for a home loan.
  • Ask for advice. If you’re lending a significant amount of money, you might want to check with your solicitor if there could be legal repercussions, including what happens to the loan if your child gets married or is in a de facto relationship.

Providing financial support in other ways


It’s a great, tax-free way of helping your children when they need financial help.

Just make sure you think carefully about whether your gift will put a dent in your retirement savings and if you’ll have enough for the lifestyle you want to lead when you wind down from work. Try our retirement simulator to find out how much you’ll need.

Also consider the impact on your Centrelink entitlements. If you’re receiving benefits, such as the age pension for example, a loan or gift to your child may impact on your payments and your financial security. You must tell Centrelink about any gifts or transfers within 14 days of when they have occurred.

Going guarantor

This is one way to help your kids own their tomorrow─whether it’s buying their first car or first home, but be careful not to put your own home or lifestyle at risk in the process. Make sure you only go guarantor for an amount that you can comfortably afford to pay if your child defaults on payments. 

What else to consider

Whatever option you choose to help support your kids:

  • You should seek advice before making any loan or gift.
  • Think about taking out insurance to cover you, or your child, in the event of unforeseen circumstances.

Find an adviser

Choosing the right financial adviser is an important decision, which is why AMP has developed a tool that enables you to find an expert who is right for you.

Find an adviser


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© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.