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Helping your kids financially is a goal many Kiwi parents share—but doing it the smart, sustainable way is where the real challenge lies. Whether it’s a house deposit, uni fees or simply giving them a leg up, navigating the emotional, financial, and legal layers of support takes more than good intentions.
James and Mike break down how to help your children without compromising your own retirement, spoiling their sense of responsibility, or falling into common traps like “trash deposits.”
Building Wealth First: Two Approaches to Help
A common motivation for parents is setting up their kids for success, often from the moment they’re born. There are typically two financial strategies to help achieve this:
Regular drip-feeding into a child-specific investment, and
Focusing on building your own wealth, then using a lump sum later.
The second method tends to be more sustainable. It keeps your financial efforts concentrated, avoids splitting focus, and ensures you’re in a strong position before gifting funds. However, for those without strong budgeting discipline, setting up a separate account and drip-feeding into it can work well—as long as it’s structured properly.
Trash Deposits and Better Alternatives
One of the most frequent mistakes is leaving kids’ funds in a bank account. As James explained, this essentially turns into a “trash deposit,” eroded by inflation and delivering poor returns over decades. Instead, options like KiwiSaver (with restrictions), managed funds, or index funds offer significantly better long-term growth.
For example, $10,000 invested from birth with $20 per week added could grow to $82,000 by age 21 at a 7% return. Contrast that with a static bank account—likely under $30,000—and the difference becomes painfully clear.
KiwiSaver vs. Flexible Investment Accounts
While KiwiSaver provides locked-in security, it also limits flexibility. Your child may not want to buy a house—they might want to start a business or pursue a trade. A more flexible investment account, though riskier, can allow them to choose their own path.
However, the restrictions of KiwiSaver can be a blessing in disguise. Many 21-year-olds, let’s be honest, might not make the wisest spending choices if handed a lump sum with no guardrails.
Are You Financially Ready to Help?
Before gifting any money, ask yourself: Am I financially in a position to help?Every family has different priorities—whether it’s lifestyle, retirement age, or home ownership. Map out your own goals first. Reverse-engineer your financial plan and prioritise accordingly. Giving money to your kids without this context could be a major regret down the line.
Education also matters. Financial support is far more powerful when paired with financial literacy—budgeting, saving, and understanding value. Without these fundamentals, even the most generous gift can go to waste.
How to Gift Without Regret
When you do decide to give, there are three key structures:
1. Gifting
The simplest method—sign a gifting certificate confirming the funds are non-repayable. It’s fast, cheap, and easy. The risk? If your child’s relationship ends, their partner may walk away with half. A 50/50 property split is common in NZ.
2. Loan Agreement
This approach provides more legal protection. Parents can document a repayable loan, often backed by a solicitor. It offers structure and safeguards if the relationship ends, though it’s more complex and typically requires professional advice.
3. Equity Partnership (Co-ownership)
Increasingly popular, this option involves co-owning the property or leveraging the equity in your own home to help your child reach a 20% deposit. It can unlock better lending rates, more cashback from banks, and lower risk overall. However, it also requires legal and bank approvals.
Key Takeaways
Build your own wealth firstbefore financially assisting your kids.
Avoid term depositsfor long-term savings—they lose value to inflation.
Drip-feeding into investment accountscan be powerful, if done right.
KiwiSaver is secure but inflexible, especially for young adults.
Gifting should be paired with financial education, not replace it.
Legal structures matter—choose between gifting, loans, or co-ownership.
Model good money behaviour—your kids learn more from your actions than your words.
Next Steps:
If you’re planning to help your kids onto the property ladder—through gifting, co-ownership or a loan—chat to our mortgage team to find the best option for your goals and situation.
If you’d like to learn more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
