4 ways an early inheritance could change your child’s life
Written and accurate as at: Jun 13, 2025 Current Stats & Facts
Giving an inheritance is one of the most generous things you can do for your children, but the timing can make all the difference. And with so many Australians living longer these days, many inheritances are coming too late to actually make an impact.
Instead of waiting till you pass away to give your kids a lump sum, you might be able to help them more by handing out smaller gifts at key life stages. Below, we look at some of the ways they could put that money to use.
Getting their home deposit over the line
Saving up a 20% deposit is one of the biggest barriers to home ownership, and the continual climb of property prices can push it even further out of reach for younger Australians. Here’s where a bit of parental charity can make a major difference.
If you can assist with your child’s deposit, it can be just what they need to escape the rental market and jump onto the property market instead. You don’t have to give the full amount – even a partial contribution can help reduce their loan-to-value ratio and save them from having to pay Lenders Mortgage Insurance.
From here, a whole host of possibilities are unlocked. Owning a home could help with goals like starting a family or funding their retirement down the track. And as your child builds up equity, they might even be able to leverage it to start a property portfolio.
Getting ahead on their mortgage
If your child already has a mortgage, a modest financial gift can be deposited in their offset account or go directly towards paying down the principal. Either way, any extra repayments will help reduce the balance on which interest is charged.
And if your child can keep up the momentum and pay more than the minimum required each month, they might see their interest payments steadily deflate over time. This can ultimately save them thousands of dollars and shorten the life of their loan by years.
Paying off higher education fees
While HECS-HELP debt might be more tolerable than other types of debt, given that your child’s income determines when and how much they pay, it’s still not particularly pleasant. And with indexation tied to inflation, it can linger in the background for much longer than your child is comfortable with.
If you’re able to help whittle it down, you can free up your child’s cash flow and make it a little bit easier to navigate the rising cost of living.
It might also lower some of the hurdles to buying property if that’s in the cards, as lenders tend to include HECS-HELP debt in their serviceability tests (though recent changes give them leeway to disregard it if it will be paid off soon).
Help them start investing
It might not be as immediately helpful as some of the other options on this list, but investing is one of the most effective ways to beat inflation and grow your savings over time. If your child hasn’t tried their hand at it just yet, offering a small sum to get them started can give them the motivation they need to turn it into a lifelong habit.
Don’t neglect your own needs
Giving your kids smaller gifts sooner can give them a meaningful headstart in life, and there’s a joy in being around to see them put that money to good use. But you’ll also need to be mindful of the potential impact on your own lifestyle.
Will you have enough savings left over to secure the retirement you want? Are you still confident in your ability to manage surprise expenses? Will your Age Pension be affected? These are all things you’ll have to discuss as a family before you make any decisions. And if you’re looking for personalised advice, consider reaching out to a qualified financial adviser.