The changing face of Australian households
How multi-generational living can benefit the whole family financially
28 July 2017
The face of Australia’s households is changing to include adult children (kidults), parents and grandparents.
Where kidults are concerned, this change has come about due to rising house prices and rents and a weaker job market – driving adult children to stay at home longer or flock back to the family nest.
The number of people in their twenties and early thirties living at home with parents has increased by one-fifth to almost 400,000. That’s an increase of 20 per cent in the last five years, according to the latest data from the 2016 Census . But millennials aren’t the only generation to be feeling the pinch.
Older Australians are facing financial pressures of their own with changes to superannuation, the pension and aged care. In fact, in January of this year 330,000 older Australians lost their pension entitlements when the assets test was modified. So, what does all this mean?
Unfortunately, those stuck in the middle have had to pick up the financial slack for both age groups. This cohort is most commonly referred to as the “sandwich generation”, a term first coined by social worker Dorothy Miller in the early 80s.
The sandwich generation are those in the age bracket of 40-65 who take on the responsibility of caring for both their adult children and parents all at once. And with financial pressures being at an all-time high for millennials, gen Xers and baby boomers alike, this has never been more prevalent.
These economic stressors have been the catalyst for a surge in multi-generation living, revealed in the latest census figures which show a significant jump in five and six person households across Australia (Census, 2017).
But, this isn’t necessarily bad news. In fact, there are many benefits to multi-generation living and the biggest of all is financial.
Getting ahead financially as a family
Climbing the property ladder
While the idea of shacking up with your parents and kids might make you want to run for the hills, the reality is banding together as a family unit financially can benefit all those involved.
For kidults this change could turn home ownership from a dream to reality and make saving for a house deposit much easier. Plus, the cooling property market in Melbourne and Sydney suggests kidults may not have to stay at home that long in order to save. And for those stuck in the sandwich generation, the pressure could ease too.
Certain financial institutions, including Liberty Financial, take into account board received from family members as income when it comes to assessing the serviceability of a loan. So, if your kidults have come back home and are financially dependent, it might be a good idea to agree on a set amount each month to contribute to household costs. However if, as a family, you’re still renting co-purchasing a property could be another option.
Some lenders will assess a loan comprising of multiple family members provided there is a clear benefit to all parties. As a family unit you’ll likely save a deposit more quickly. You’ll also benefit in sharing expenses such as legal fees, stamp duty and inspection reports.
But before you go ahead with any plans, be sure to speak to one of our advisers. Although saving on housing is one of the biggest benefits to multi-generation living, there are many other benefits to combining forces.
Reduce your monthly outgoings
Australians owe approximately $32 billion on credit, that’s an average of $4,300 per card holder according to the Australian Securities and Investments Commission (ASIC).
With this in mind, we should embrace arrangements like multi-generational living that enable us to lower costs and tackle our finances. Sharing the burden of household bills like utilities, rates and groceries is a great way to do this.
Given that our post July energy bills are set to get much higher, this is more important than ever. The key to success, when living together as a family, is to work together.
There’s strength in numbers, so have comfort in the fact that by banding together you’ll not only enjoy the benefits of added support but you’ll also come closer to achieving your financial dreams.
We’re here to help!
Families need a helping hand now and then and, at Liberty, we’re fully aware of this. If you have any questions about how we might be able to help get in contact with a Liberty adviser today.
For more information on housing affordability read ‘Was housing affordability as big of an issues 25 years ago’.