Grandparents have long played a pivotal role in the lives of their grandchildren. And as younger generations navigate cost-of-living pressures, university debts and escalating house prices, one in three grandparents plan to help their grandchildren financially. ¹

According to McCrindle Research: 'Baby Boomers make up just 21% of the population but hold almost half (48%) of the private national wealth.' ² And grandchildren will benefit from one in three grandparents who want to give them 50% or more of what they have, as part of a trend some are calling 'the grandparent economy'. ³

Already two in five (39%) Australians have received financial assistance from their grandparents. Some of this constitutes a financial inheritance for 13%; free or reduced rent for 11%; and babysitting for 11% (cutting the cost of childcare). And up to one in five grandchildren have also had help with bills or education costs. ⁴

It's only natural to want to help those we love. But before you help your grandchildren out financially, ask these four questions first:

1. How will this support impact your financial security?

First assess your own financial needs and consider whether you have adequate savings for your future health and aged care. Make sure that if you provide financial assistance, you won't be left short. When you demonstrate financial responsibility, you role model good behaviours to your grandchildren.

Before giving gifts, talk to your Count Financial adviser about the potential tax and social security consequences for both you and your grandchildren. Note that if you give away income or assets, they may still count towards the income and assets tests for your age pension eligibility. The same can apply if you sell them for less than they're worth. ⁵

2. What's the best way to provide support?

Take into account the needs of both you and your grandchildren. Here are some options to consider:

• Co-saving. If your grandchild has a financial goal such as saving for a home or a car, then you could match every dollar they save.
• Inheritance. If you're able, gifting while you're still live means you'll have the pleasure of seeing your grandchildren benefit from your gift. However, if this isn't within your means, then leaving an inheritance may be the better option.
• Loan. A concessional loan can enable you to help your grandchild now while also protecting your gift from being distributed to an ex-partner in the event that your grandchild's relationship breaks up.
• Tie the gift to a specific purpose. You can specify that the gift or inheritance is to be used for something enduring, such as a home deposit, car or education.
• Insurance bond, shares or a managed fund. Contributing to an investment each birthday can teach grandchildren about saving and delayed gratification. An investment also opens opportunities to discuss concepts like investment strategy, compound interest and dollar-cost averaging. Your Count Financial adviser can help set up investments for your grandchildren in a tax-effective way.

3. Is your gift fair?

Consider fairness and be transparent with each of your family members. Some grandparents must decide whether they gift to their grandchildren on a per-family basis (i.e. the same amount per family, divided between the grandchildren) or on a per-grandchild basis. If you've already gifted to some grandchildren, such as paying school fees, take care to equalise this gift in your will so that grandchildren who may be currently too young for school can receive the same benefit in future.

4. Is your gift responsible?

Ensure your gift doesn't discourage your grandchildren from developing savings and budgeting skills nor from taking financial responsibility.

References for compliance approval:

1. McCrindle, Grandparent economy, based on 2021 census data and McCrindle and Futurity 'Grandparents' contribution to education report 2023, accessed 12 February 2025

2. Ibid

3. Ibid

4. Ibid

5. Services Australia, Gifting, accessed 12 February 2025