Money can do more for those with time left to make it work. · Lincoln Beddoe
Last year we worked with a couple, I’ll call them Mark and Lisa. Both in their late 50’s, Mark was running a consulting business and Lisa was working in healthcare. Their daughter was 35, renting in Sydney and watching the price of a potential first home run away from her savings.
Mark and Lisa were thinking about giving her $100,000 to put towards a home deposit, and wanted to know if they could afford to. This is one of the most common planning conversations we’re having at the moment.
The bank of mum and dad has become one of the biggest sources of deposit help in the country, but most of the decisions are made on emotion – love, guilt, or a bit of both.
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The numbers say you should price it up first, because this can be a seven figure family decision disguised as a nice gesture.
Mark and Lisa’s choice
The idea of a ‘living inheritance’ is simple – give the money while you’re alive, when it changes your kids’ financial trajectory, instead of when you die and they’re 60 and all the hard yards have been done.
It’s estate planning turned on its head, and the logic here is strong. $100,000 to a 35 year old trying to crack into the property market does more than $300,000 to a 60 year old who doesn’t need it. Timing beats size.
But there are two sides to the trade, and most parents only really look at one. The gift comes out of your retirement assets, and stops compounding for you the day it leaves. What Mark and Lisa hadn’t done was put numbers around both sides of the equation.
Parents 10 years from ‘freedom date’
To make it concrete, Mark and Lisa were about 10 years from their planned ‘freedom date’ – the point where work would become optional.
If instead of gifting the $100,000 they kept it invested at the long term Australian long term sharemarket return of 9.8%, it would grow to around $255,000 by the time they got there. This is the real price of the gift – not the $100,000 that leaves their account today, but the $255,000 missing from their retirement when Mark and Lisa want to stop working.
For Mark and Lisa, their plan could absorb this cost. Their investments were on track, the business sale was coming, and the $255,000 moved their freedom date by less than a year. This is the real test – not whether you can spare the cash today, but whether your future self can spare the compounding.
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What the living inheritance gift does for your kids
Looking at the other side of the equation, this is where the timing argument gets real. In the short term, the gift beats the market that’s outrunning her. An $850,000 first home growing at the long term property growth rate of 6.8% costs around $1.18 million in five years.
Gifting money to kids early is a hugely common thing we see among clients. · Ben Nash/Getty
The $100,000 deposit today would buy Mark and Lisa’s daughter entry at today’s prices and skips around $330,000 of price growth she’d otherwise been chasing, and can stack with the first home buyer schemes she’s eligible for.
But looking longer term is where you can see the bigger impact. Mark and Lisa’s daughter was 35, so that $100,000 working as home equity at 6.8% has 30 years to compound before she turns 65 – growing to around $720,000. The same dollars that cost Mark and Lisa $255,000 of retirement money are worth almost three times as much to their daughter, because she has more runway in front of her.
Money does the most work in the hands of people with the most time ahead of them, which is rarely the people giving it.
Why this matters more after the federal budget
The May 2026 federal budget raised the stakes here. Higher CGT on your investments, negative gearing changes, and trust taxes on top – these shifts have made it harder for young people to build wealth from a standing start, and harder for parents to rebuild assets they give away.
The frustration off the back of these changes is very real – and understandably so. But it’s more important than ever you use every rule to your advantage, for both generations – from tax efficient investing on your side, to getting the structure of any help right on theirs. The value of a rock solid financial plan before you write a cheque just went way up.
The wrap
A gift that wrecks your own retirement helps nobody. Your kids don’t want your $100,000 if it means supporting you in 20 years – but there is clearly an opportunity here.
The bank of mum and dad isn’t the problem – it’s doing it without running the numbers that is. Helping your kids early, when they’ve got decades to compound it, can beat any inheritance you leave behind.
Mark and Lisa made the gift, but only after pricing both sides. You don’t make a seven-figure family decision on emotion. You price it, then you decide.
Ben Nash is a finance expert commentator, podcaster, financial adviser and founder of Pivot Wealth. You can learn more about how to be smart with your money through Ben’s book Replace your Salary by investing.
If you want to learn how financial advice can help you, you can schedule a quick call here. And if you want some help with your money and investing, Ben has created a free seven-day challenge you can use to get more out of your money you can join here.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.
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