We Asked People When They Last Borrowed Money From Their Parents
If talking about money is a taboo, then talking about borrowing money from our parents is an even bigger one. But the statistics suggest that it’s happening with some frequency – a recent Australian Housing and Urban Research Institute report estimates that in any one year, 5.9% of Australians receive a cash transfer from their parents.
But what are the circumstances under which people ask for money from a parent? We asked people why they asked for a loan, and the answers were pretty fascinating.
Borrowing from Mum and Dad
For many of the respondents, the money was given to them in the knowledge that it allowed them to pursue further education or a career change – potentially increasing their earning capacity, and their independence, in the future.
“Two years ago when I finished uni but hadn’t gotten a job yet, mum ‘loaned’ me some money to tide me over – but in that sort of way where we both knew she didn’t really expect me to pay her back, at least not anytime soon. I was reluctant and she was insistent. As I was finishing a masters degree that would actually set me on a career path, we could both be OK with her giving me a bit of help knowing I wouldn’t end up relying on it too much.”
I was reluctant and she was insistent
Another woman in the midst of a career change and currently studying a second degree says she receives regular payments. “I’m 28 and currently receive $100 in my bank account from my mum every fortnight. My dad doesn’t know about it. They also both insist on paying whenever we eat out, go to a show, etc.”
Asking for help
One woman found herself asking for a loan when she had to do an unpaid teaching prac. She says working for months without being paid, in order to gain qualifications, was a tricky position: “I think in general we fail to realise the systemic issues that leave 20-somethings with no choice but to borrow – the discourse around stable careers has shifted significantly, along with the cost of living, and it’s unfair to hold us to the same standard as our parents.”
Similarly, one 20-something told how he had to borrow money to buy a car for his job. Without it, he wouldn’t have work. The income from his new job allowed him to pay off the loan within six months.
Another common reason for a parental cash injection was health problems. One 35-year-old woman told how she had to ask for a $2000 loan from her parents for a month. “It wasn’t in response to general life admin, just a handful of medical bills after a bad foot break all landed at once, and it’s only until I get some reimbursements from my insurance company.” She says asking for the loan was embarrassing, and made her feel juvenile – at her age, her parents were caring for two kids.
She says asking for the loan was embarrassing, and made her feel juvenile
Of course, these are simply anecdotes; the stats round out the story of parental loans. That AHURI report again:
“Over the decade 2002–12, a large number of Australians (5.8 million) received one or more cash transfers… The average amount of any one cash transfer ($4,600)… and the median is $1,000. Over the decade, 2.7 million Australians were the recipients of multiple cash transfers, and of those beneficiaries, the average they received was three transfers. On a per-person basis, the average cumulative value of cash transfers over the period 2002–12 is thus higher at $9,000 and the median is also higher at $2,000.”
It found that those getting a helping hand are more likely to be self-employed, to have a bachelor’s degree, and to have larger bank deposits (yes – even though they’re borrowing money from their parents).
On the flip side, we also heard stories from people who didn’t have access to that kind of leg-up. One told how her dad repeatedly failed to pay to register his car, and was fined again and again by police. The family would then have to pay off the fines by subsisting on toasted sandwiches for months. “I’ve never had the option to borrow from my parents,” she explained. “They were completely irresponsible with their money. In fact I have loaned (read: donated) money to them, even when I was a uni student working three jobs to pay my bills.”
She says she’s always been careful to have an emergency fund, so that she wouldn’t end up like her parents.
Another woman told how she’d moved back in with her mother, who isn’t wealthy. “My mum is a baby boomer you don’t often read about, in that she isn’t rich and has to keep working into her late 60s due to having very little super. I’m now unwell and unable to work so had to move in with her. Centrelink doesn’t cover my medical expenses, so mum helps out when she can.”
“It’s a lousy spot to be in for both of us,” she says.
Then there were the people who confessed to living beyond their means. One man said he borrowed $50 to $100 every couple of weeks, explaining that “sustainability is beyond me at this stage in life”. While the money often went towards food, he admitted he was never lacking in certain non-essentials – namely, cigarettes and alcohol.
He says his parents can spare the money. “I think they don’t mind because they know I’ve paid my own way renting and working in Sydney for the most part.”
One man told how he’d accumulated a credit card debt – he can’t remember what exactly he’d spent the money on, but said it was likely that it was dinners out and other lifestyle things – and his parents had given him a $4000 loan to consolidate it and avoid interest. He says the arrangement with his parents was a “terrible idea”.
“I set up auto payments but a couple didn’t come out and I didn’t notice,” he says. “They didn’t bring it up until a year later and they were really sore about it. Horrid.”
It was a theme that came up time and time again: how borrowing money complicated the borrower’s relationship with their parents, and how guilty they felt.
Many people who find themselves in similar financial pickles can’t ask for a loan from their folks. A little honesty and candidness about parental help can pull back the curtain on advantage – and also emphasises the importance of an emergency fund, a savings stash for when life doesn’t go to plan.