Family money: Susan Hely on grandparents and childcare

But looking after the grandkids can come at a high financial and emotional cost

Iam a big fan of grandparents looking after grandchildren. They are parents themselves, provide high-quality care and, best of all, offer unconditional love. Around 75% of grandparents see their grandkids at least once a month. Around 47% of grandmothers do “grandchild care” once a week compared with 41% of grandfathers.

Often grandparents rearrange their lives so they can spend time with their grandkids. They happily do it for free. This was what my mum did when I returned to work. She offered me a couple of days a week, which meant my kids only went to formal childcare for two days.

It was a generous act by my mum. My partner and I had bought our first home when I was pregnant and we were paying off an enormous mortgage – though not as big as today’s mortgages. At the same time we were launching our careers. Our employers were typically inflexible and demanding and my mum’s care gave us flexibility.

It also gave me peace of mind to know that my kids were being taken care of by someone who loved them to bits. Her four grandkids brought her lots of joy, but she also found the long days (often from 8am to 6pm) exhausting. It went way beyond the fun stuff of taking them to the zoo, reading books and buying ice-creams. She didn’t really want to be a disciplinarian.

My mum often held our lives together. My employer wasn’t child friendly – nor were my partner’s work circumstances – so I relied on her if the kids were sick and couldn’t go to care or school. Because I had only four weeks of annual leave and nine weeks of school holidays, her help was essential.

When my kids went to school, Mum would often pick them up, take them home, give them dinner and stay with them until I got home from work. My partner’s parents chipped in as well.

While some grandparents happily do whatever they can to be with their grandkids, some understandably resist the role. It isn’t all joy, and can be tiring and fruscare, trating. Grandparents do have to push back, otherwise they can be overwhelmed with care requests.

They need to limit their care hours so they can keep working, have a robust social life, look after their health and protect their finances and travel plans.

Government support can help take some of the financial pressure off families in the form of a childcare subsidy that is means-tested and depends on the type of family income, hours of care and the parents’ level of work, training or study. It is paid directly to providers, who reduce fees to the family. The childcare subsidy was recently boosted so that people on incomes above $189,390 are eligible for a higher subsidy and families with more than one child in childcare receive more.

In addition, a birth mother or primary carer can qualify for government-funded parental leave of 18 weeks for a newborn.

On top of that, around 50% of employers offer some sort of paid leave – just how long varies from company to company. Typically, it is offered to women as paid maternity leave, but some companies are ramping up paid leave to new dads.

Around 35% of Australia’s top 500 companies offer two or more weeks of secondary carer’s leave, according to a survey by CoreData for the health insurer HBF.

Caring for grandkids can be costly. Grandparents who are working may reduce their employment hours to be available on regular days when their adult kids return to work. This will result in reduced income, with less going into their superannuation, and this can harm their financial security in retirement.

Often grandparents put their own interests and projects on ice to care for grandkids. They lose social connections that are important for their wellbeing.

Grandparents find themselves footing the bill for some of the expenses confronting their adult children and grandkids. It often goes beyond gifts and splurges for the grandkids to food, bills and the mortgage. If they are at their grandkids’ home, they are on hand to see the bills come in and pile up.

Grandparents worry about their children’s jobs, their marriages and their stretched finances.

The high cost of housing is hurting young families, and grandparents are often the fallback. I know adult kids who have been living with their parents for a decade, trying to save enough for a home deposit, which has been made more difficult this year with house prices jumping by more than 8%. Wages have stagnated since 2011 so it is often hard to absorb the extra costs of young children.

Adult kids and grandkids can boomerang back into the family home in a crisis such as a relationship breakup, a redundancy, a rental dilemma or a medical emergency.

Grandparents who provide lots of support to their adult kids and grandkids are often told by their friends to pull back – that their adult kids are taking advantage of their generosity and it isn’t helping them to stand on their own two feet.

While some grandparents can afford to absorb the extra costs, others are squeezing their own financial resources. You don’t want to run down your retirement reserves, which could have consequences for your own housing or retirement dreams.

Source of conflict

Grandparents have a dilemma if they help one adult child’s kids: what about any others? Often the first grandchild receives a lot more attention than the fifth or sixth. Grandkids who are closer to grandparents are easier to look after. Is it realistic to provide the same support for each grandchild?

My parents could never agree on how much help to provide to their grandchildren. My father resented my mother’s limitless care and how it derailed his plans to enjoy retirement and the empty nest.

It caused tension and disagreements about how much help to provide. While mum didn’t give us money, she gave us lots of time and paid for toys, books and food. Sometimes she would say, “Don’t tell your father about this.”

Also, I know people who have remarried, and their new partner didn’t want his or her money to help out grandchildren who are not blood relatives.

Susan Hely has been a senior investment writer at The Sydney Morning Herald. She wrote the best-selling Women & Money.